Grocery and liquor wholesaler Metcash said revenue was up 6.6 per cent to $5.6 billion, despite intense competition in the grocery sector, lower levels of inflation and price deflation in the produce sector.
Net profit rose 36.5 per cent to $109.2 million from $80 million, while normalised net profit has risen 12.3 per cent to $109.2 million from $97.2 million for the half year to 31 October 2009.
“Metcash has continued to show strong growth in sales and earnings, led by our major division IGA Distribution,” said Metcash CEO Andrew Reitzer.
“We also continued to reduce our cost of doing business as a percentage of gross profit to 63.98 per cent, with our supply chain improvements enhancing the performance of the group’s cost of warehousing and distribution.”
Reitzer said that IGA Distribution, which supplies IGA supermarkets, continues to be the best performer of the Metcash business and is performing well against the competition from the two chains.
“We have fulfilled our plans to create a national distribution network for our new Fresh business and are delighted that this operation’s revenue is on track to exceed $1 billion this financial year.”
Wholesale sales of IGA Distribution rose 9.3 per cent to $3.48 billion, with earnings before interest tax and amortisation growing 11.5 per cent to $163.3 million. Sales were strong throughout the six months despite lower price inflation. Comparable store sales grew by 6.4 per cent.
“IGA Distribution continues to post strong underlying growth, both in terms of comparable stores and real sales, with our retail development activity recovering quickly to levels experienced before the global financial crisis.”
The number of new branded stores rose by 31 during the half year, with 63 openings forecast for the full year, well above previous forecasts, as well as 41 store refurbishments.
“The trading environment is strong, however low price inflation continues to hamper trading opportunities across all of our business pillars,” said Reitzer.
“As economic conditions continue to improve, we reiterate our guidance of seven to 10 per cent growth in pre-abnormal earnings per share for the year to 30 April 2010.”