Metcash Limited has released its financial results for the half-year ended October 2021 with strong sales and earnings in all pillars seeing group revenue increase 1.3 per cent to $7.2bn.
The group’s liquor business saw growth continue, with total liquor sales, including charge-through, increasing 6.6 per cent on the first half of last year, to $2.17bn. Sales were up 21.9 per cent on the first-half of 2020, with strong demand from the IBA retail network and contract customers, as well as increased on-premise sales.
Metcash said the IBA retail network continued to be buoyed by the shift in consumer behaviour and improved competitiveness of its stores, as well as from home consumption substituting for on-premise consumption.
Group CEO, Jeff Adams said: “It has been a very pleasing first half for both Metcash and our independent retailers as we continued to build on the very strong prior corresponding half.
“All Pillars again benefitted from the shift in consumer behaviour and improved competitiveness of our retail networks supported by the success of our MFuture program.
“The preference for local neighbourhood shopping and shift from cities to regional areas helped our independent retail networks all deliver ‘like-for-like’ (LfL) sales growth in the half.
Compared with 1H20, substantial growth was delivered with IGA Supermarkets up 18.8 per cent, IBA stores in Liquor up 27 per cent, Independent Hardware Group (IHG) stores up 17.7 per cent and Total Tools stores up 51 per cent, improving the overall health of the network.
“This is a significant achievement given the many challenges in the half including staff isolations, labour shortages, supply chain issues, continuously changing health regulations and other lockdown-related impacts.
“Despite the challenges presented by extended COVID-related restrictions and lockdowns, we continued to make good progress with our MFuture initiatives, and plan to accelerate these in the second half as restrictions ease. This includes our investment in new eCommerce platforms, which are currently being rolled out across our Food and Liquor networks. In Hardware, our leading platforms in IHG and Total Tools continue to generate strong online sales growth.
“Our Horizon technology transformation program aimed at making it easier for suppliers and independent retailers to do business with us, is also progressing well with the first delivery, which includes replacing our core financial systems, successfully completed in November 2021 with no interruption to business operations or customers.
“The strength of our independent retail network continues to improve. Retailers remain encouraged about the future and are investing in new stores and refreshes that further improve the quality of the network.
“Importantly, the sales momentum seen in recent periods has continued into the second half with sales growth recorded in all Pillars in the first five weeks of the half. We are also expecting our Food and Liquor pillars to benefit from a strong Christmas/New Year trading period and their extensive regional presence.
“The strong Group performance and financial position, together with an increase in our target dividend payout ratio led to a significant lift in the interim dividend, which is up 31 per cent to 10.5 cents per share.
“We remain well placed to continue investing in our growth plans under MFuture focused on further improving the competitiveness of our independent retailers,” Adams said.
In terms of liquor wholesale sale to the IBA banner group, these were flat, but increased 24.1 per cent when compared with the first half of 2020, with the Cellarbrations and The Bottle-O banners performing best.
Liquor EBIT increased $4.2m or 10.5 per cent to $44.3m which Metcash said reflected “the contribution from the increase in sales volumes, which more than offset an increased weighting of lower-margin categories in the sales mix, as well as higher costs associated with the impact of COVID and a tight labour market”.