By Andrew Starke

Grocery and liquor wholesaler Metcash has recorded better then expected results for the six months to October 31 despite a flat return from liquor arm, Australian Liquor Marketers.

Metcash’s net profit rose 36 percent to $109.2 million over this period on the back of 6.6 percent growth in wholesale sales to $5.6 billion.

However it should be noted that the group posted costs from terminating its interest hedging arrangements in the previous corresponding half year.

Australian Liquor Marketers’ sales grew 1.2 percent to $1.28 billion, with earnings before interest, tax and amortisation (EBITA) rising to $14.6 million.

Sales to Independent Brands Australia (IBA) banner groups rose 7.4 percent, with 9.9 percent sales growth by the Cellarbrations brand, 16.2 percent by IGA Plus Liquor and 5.4 percent by Bottle-O.

Beer volumes were up 5.3 percent but Metcash reported that progress on growing this area has slowed.

This division has continued to focus on improving store standards with 41 store refurbishments.

However ‘on-premise’ supply to hotels and restaurants performed poorly, declining 12.4 percent.

Commenting on Metcash’s outlook, CEO Andrew Reitzer, said: “The trading environment is strong, however low price inflation continues to hamper trading opportunities across all of our business pillars.”

“As economic conditions continue to improve, we reiterate our guidance of 7 to 10 percent growth in pre-abnormal earnings per share for the year to 30 April 2010,” he said.

Metcash hopes to build a $1 billion hardware business generating earnings of $30 million to $40 million within three years if it is given the all clear to buy an initial 50.1 percent stake in the Mitre 10 group, Australia’s second-largest hardware chain. 

Metcash shares were trading at $4.58 at midday today, down from $4.62 seven days ago.

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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