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Hardware helps drive up Metcash profit

Petrina Berry  |  04 Dec 2017Text size  Decrease  Increase  |  
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BRISBANE - [AAP] Grocery wholesaler Metcash's (MTS) liquor business and Home Timber & Hardware chain have underpinned its 24 per cent lift in half-year profit.

Its supermarkets business, as the supplier of IGA and Foodlands stores, continued to come under pressure amid Woolworths and Coles' price cuts and the aggressive expansion of Aldi into South Australia and Western Australia.

Net profit grew to $92.9 million during the six months to October 31, up from $74.9 million a year earlier.

Sales revenue rose 7.6 per cent to $7.1 billion, up from $6.6 billion in the prior year largely due to a full half-year contribution from Home Timber & Hardware (HTH) that it acquired from Woolworths in October 2016.

The first half of the 2017 financial year had included only one month of sales from HTH.

Outgoing chief executive Ian Morrice said both liquor and hardware had performed strongly, including a turnaround in HTH in a relatively short period.

"We are now half way through our three-year Working Smarter program, and the initiative is delivering significant benefits, particularly in our supermarkets business," Mr Morrice said in a statement to the ASX on Monday.

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"The savings achieved have been a key factor in supermarkets maintaining its earnings, despite the significant headwinds that include a continuing high level of deflation."

Hardware, which includes the group's Mitre10 chain, contributed $1.06 billion in revenue for the half, up from $581.6 million a year ago.

The group's liquor sales, which includes Cellarbrations, The Bottle-O and IGA Liquor networks, rose 5.1 per cent to $1.64 billion.

Food sales for the half dropped 1.4 per cent to $4.36 billion compared to the same period a year ago.

The group said food sales continued to improve across the eastern seaboard but remained weaker in SA and WA due to Aldi's aggressive rollout in those states and WA's challenging economic conditions.

The IGA retail network recorded a 1.1 per cent fall in the key like-for-like sales.

HARDWARE & LIQUOR UNDERPIN METCASH PROFIT:

* Net profit up 24 pct to $92.9 million

* Revenue up 7.6 pct to $7.1 billion

* Fully-franked interim dividend of six cents per share v. no dividend in prior year

 

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© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

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