By Andy Young
Metcash Limited has released its financial results for the year ended 30 April 2017, which showed an increase in sales revenue, EBIT and underlying profit after tax, but a drop in reported profit after tax.
Group sales revenue increased by 5.4 per cent to $14.12bn, from $13.40bn in the previous year. Group EBIT for the year increased 7.7 per cent to $296.7m (FY16: $275.4m) which the company said was driven by continued earnings growth in both its Liquor and Hardware businesses.
Underlying profit after tax increased 9.3 per cent to $194.8m (FY16: $178.3m), while the reported profit after tax was $171.9m (FY16: $216.5m), which included $22.9m of costs (post tax) related to the acquisition and integration of Home Timber and Hardware (HTH), and costs associated with implementing its Working Smarter program.
Group CEO, Ian Morrice, said: “Pleasingly, the group delivered earnings growth supported by the HTH acquisition, and strong cash generation in a difficult external environment.
“Our initiatives focused on supporting Independent Retailers be ‘The Best Store in Town’, together with our Working Smarter program aimed at simplifying the way we operate and reducing costs, have helped mitigate the impact of difficult trading conditions.
“Across our Pillars, we continued to see positive earnings momentum in both Liquor and Hardware, while in Food the impact of intense competition and weak economic conditions in Western Australia were largely offset by the benefit of the 53rd trading week, Working Smarter and other cost savings.
“Significant progress has been made on the integration of HTH, and we remain excited about the opportunities this acquisition presents.
“The strength of our financial position has us well placed for future investment, and the Board was pleased to announce it is bringing forward the recommencement of dividends for shareholders.”
Metcash reported that its liquor business has now delivered sales and revenue growth for the past five reporting periods. Liquor sales in the financial year increased by 3.5 per cent to $3.33bn, and were up 1.8 per cent excluding the 53rd trading week. The group said its IBA bannered network continued to perform well, with wholesale sales through the network increasing 6.3 per cent (up 4.6 per cent excluding the 53rd trading week).
Retail store sales at IBA increased by 1.7 per cent on a like-for-like basis.
In terms of the outlook, Metcash said: "In Liquor, moderate growth is expected in the overall Liquor market, with the business remaining focused on building and improving the quality of its IBA bannered network.
"The business continues to progress initiatives to support Australian Independent Retailers be the ‘Best Store in Town’."