Metcash has reported his half-year results, which have shown that while conditions have been challenging in all parts of the business, the liquor pillar has seen both sales and market share increase.
The results said that the liquor pillar delivered a strong result, with independents outperforming the chains, which Metcash said was led by the IBA network. In addition, the group said that the tailored, localised and competitive offer of Metcash Liquor has again “driven strong performance”.
Group CEO Doug Jones said: “Our diversified portfolio strategy continues to deliver in the face of a challenging external environment. Conditions were difficult for all our pillars, but particularly in Hardware where the decline in Trade activity accelerated in the second quarter.
“Despite this, Group sales were up significantly, with growth in the Food, Liquor and Hardware pillars. The independent value propositions continue to resonate with shoppers in a highly value-conscious environment, underpinned by the improved quality of those offers, including competitive pricing positions.
“Importantly, market shares were held in the Food and Hardware pillars, and grew materially in Liquor.”
He added: “Looking forward, as the leading wholesaler and service provider to independent businesses across Australia, our more diversified Group provides an ideal base for future growth.
“Our Food and Liquor pillars are well positioned for structural growth, while in Hardware we remain confident that the long-term market fundamentals remain positive for both IHG and Total Tools. These businesses are ideally positioned to capitalise on an improvement in activity levels.”
Group reported revenue, which excludes charge-through sales, increased 8.1 per cent to $8.5b, up from $7.8bn in the prior corresponding period (PPC). Including charge-through sales, Group revenue increased 6.3 per cent to $9.6bn, from $9.0bn in the PPC, with growth in the Food, Liquor and Hardware pillars, partly buoyed by acquisitions.
The result report said: “The Liquor pillar again performed strongly, underpinned by the independents’ localised offer and the improved execution of the business’ diversified customer strategy. Earnings were down $1.7m to $49.1m reflecting the strong trading performance, offset by the impact of reduced strategic buying.”
Total liquor sales increased 2.1 per cent to $2.5bn, with growth in sales to independent retail and contract customers more than offsetting a small decline in on-premise sales.
The report said: “Wholesale sales to retail and contract customers increased 2.4 per cent, reflecting increased shopper preference for the independents’ tailored local range and convenience.
“There continued to be signs of recovery in the on-premise segments with sales to on-premise customers down 0.6 per cent compared with a 2.6 per cent decrease in the prior corresponding half.”
The highest growth categories were value RTDs, spirits, beer and wine categories, which Metcash said comes from “cost-of-living pressures driving shopper preference for lower-priced, better value choices”.
Liquor EBIT decreased 3.3 per cent to $49.1m, reflecting the contribution from the business’ strong trading performance, the impact of reduced strategic buying with lower wholesale price inflation and increased costs.