Metcash lifts FY profit amid inflation
Food and beverage wholesaler Metcash has reported record annual sales and lifted full-year profit, but warns food inflation has continued to rise during the second half of the financial year.
The IGA Supermarkets owner and distributor says net profit for the 12 months to April 30 rose 2.7 per cent to $245.4 million.
Sales revenue for the full year were up 6.4 per cent to $17.4 billion, while underlying earnings jumped 17.7 per cent to $472.3 million.
Metcash shares rose sharply after Monday's announcement and were up 3.4 per cent to $4.29 by 1205 AEST.
Group chief executive Doug Jones attributed the record sales growth to "initiatives designed to further improve the competitiveness of our retail network, continuation of the local neighbourhood shopping trend, and the success of recent strategic acquisitions".
IGA stores continue to gain market share from bigger rivals Coles and Woolworths as shoppers increasingly shift towards neighbourhood and local supermarkets.
Metcash said total food sales rose 1.4 per cent to $9.5 billion while like-for-like sales in the IGA network increased 2.9 per cent.
The strongest growth came from Western Australia and Queensland.
At its liquor wholesale arm, total sales increased 8.7 per cent to $4.8 billion, while earnings were up 9.8 per cent to $97.4 million.
Earnings in the hardware operations, which includes Mitre 10 and Home Timber & Hardware brands, rose 41 per cent to $191 million, while sales increased 21 per cent to $3.1 billion.
Metcash declared a fully franked final dividend of 11 cents per share, up from 9.5 cents paid last year.
Mr Jones has warned of external challenges in the second half of the year, including supply chain disruptions and flooding in the eastern part of Australia.
He said food inflation is accelerating within the business, with about 60 per cent of its food and grocery suppliers having asked for price increases.
Metcash said the strong growth momentum has continued, with food sales up 5.0 per cent for the first seven weeks of FY 2023, while hardware sales have jumped nearly 20 per cent and liquor sales rose 8.6 per cent.