By Andy Young

In its half-yearly report Metcash has said that it has experienced increases in its liquor sales and profits, but these have been "more than offset" by declines in food and grocery.

Speaking at the presentation of the company's half year financial results, Metcash CEO Ian Morrice said that the earnings growth the company was enjoying in its liquor and hardware businesses, would be unlikely to counter the "headwinds" from food and grocery.

Morrice said: "While we do expect continuing improvement in food and continuing uplift in ALM and hardware, we don't think that in total this year will be enough to offset the headwinds we've got in food and grocery."

Metcash's liquor sales rose to $1.54 billion, up 3.5 per cent, which it described as "another strong result in a flat liquor market". Liquor earnings for the half year rose four per cent to $25.9 million.

The company also reported that wholesale sales through its IBA retail network increased by 4.4 per cent "reflecting a strong operational performance, store conversions to the IBA network and acquisitions". In total 61 bottleshops were converted to Metcash's banners.

Earlier this year Metcash's distribution centre at Huntingwood, NSW, suffered significant damage as a result of a hail storm on 25 April 2015. The damage saw the closure of the warehouse and it reported that temporary warehouses have now been established at Silverwater, Wetherill Park and Eastern Creek.

The Huntingwood warehouse remains closed and it is currently not expected to be fully operational until the FY2017 financial year.

The company reported that its insurance policy is expected to cover costs for the material damage and consequential losses, with $20m in cash recovered under its insurance policy in this half year.

Metcash's underlying net profit fell 6.1 per cent to $86.9m in the six months to October 31, which was a result of investments made into reducing grocery prices by around three per cent, to help reduce its price gap with Woolworths and Coles.

The Shout Team

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