Grocery wholesaler Metcash has reported a 6.1 per cent increase in profit but still expects market conditions to remain challenging for the rest of 2011.

It said that its profit after tax grew from $227.6 million to $241.4 million for the year to 30 April 2011. Meanwhile, the result was achieved on a 7.4 per cent rise in wholesale sales from $11.52 billion to $12.36 billion.

Metcash CEO Andrew Reitzer said given the challenging trading conditions, the company is pleased with the results.

“Metcash’s result was achieved through the steady performance and resilience of its independent retailer customers. This has seen Metcash and its customers continuing to invest in strengthening their operations and as a result maintaining grocery market share,” he said.

Metcash’s grocery distribution business, IGA Distribution, achieved sales of $7.56 billion and EBITA grew 4.4 per cent to $361.8 million. Sales on a comparable store basis rose 4.5 per cent.

Metcash and the independent retailer network have invested in developed 65 new stores. Of these new stores 56 joined Metcash’s flagship IGA brand further expanding the company network. Further, another 17 independent retailers converted to IGA from other store brands.

“All divisions within the Group remain focused on improving operational efficiency in the prevailing low inflationary environment and we continue our substantial investment in modernising the independent sector’s support structures and supply chain,” Reitzer said.

“Construction of our NSW mega distribution centre is well ahead of schedule and heralds an exciting future for independent retailers in NSW and provides a sound basis for long term sustainable growth.”

For the remainder of the calendar year, the company admitted in a statement that “the industry continues to experience product deflation, underlying cost inflation and a value driven consumer” and Metcash’s acquisition of the Franklins supermarket chain is imminent.

“Given these factors, the Board has concluded that it is more appropriate to provide guidance to the market at the time the Company releases its half year results in December 2011,” Reitzer said.