Metcash recorded interim net profit after tax of $2.9 million for the second half of 2017, up 24 per cent on the previous half of $74.9 million, partly driven by continued growth in the Liquor segment and improved earnings in Convenience.
In the Food sector, a positive contribution from the Convenience business and Working Smarter savings helped negate the impact of the tough trading conditions experienced in the first half.
Group CEO, Ian Mortice said both liquor and hardware continued to perform well.
“The first half results were very pleasing despite the continuation of some of the most challenging market conditions in our history. It was good to see earnings growth across all our pillars, as well as strong operating cash flows.
Food sales declined 1.4 per cent to $4.36 billion, against the previous $4.42 billion, with supermarkets down 0.8 per cent with the adverse impact of continuing intense competition on sales excluding tobacco being largely offset by an increase in tobacco sales.
There was a continued high level of grocery deflation in the period of 2.7 per cent per cent, with significant competitor investment in price and promotions.
Sales continued to improve on the eastern seaboard, while South Australia and Western Australia remained weaker.
Metcash’s IGA retail network recorded a decline in like for like (LfL) sales of 1.1 per cent.
Food EBIT increased 5.8 per cent to $89.4 million, reflecting positive earnings from the Convenience business, compared to an operating loss of $4.3m in the prior corresponding period which included asset write downs. Supermarkets earnings were broadly flat compared to the prior corresponding period.
Liquor sales increased 5.1 per cent to $1.64 billion, reflecting continued growth in the IBA bannered network. Wholesale sales through the IBA bannered network increased 8.7 per cent, driven by a number of contract customers converting to the IBA network. Retail sales through the IBA network increased 1.6 per cent on a LfL basis.