Metcash reports growth above market guidance
Grocery and liquor wholesaler Metcash has reported growth above market guidance, despite economic conditions, and continues strong competition in the supermarket sector.
Metcash today announced 12.1 per cent growth in EBITA to $382.5 million, and wholesale sales up by 9.3 per cent to $10.97 billion for the year ended April 30.
The company’s key business, IGA Distribution (IGA>D) posted strong growth in EBITA (Earnings Before Interest Tax and Amortisation) – with wholesale sales growing by 11.3 per cent and comparable sales by 9.0 per cent. Metcash’s customers’ share of the grocery market, as measure by Nielsen, has lifted to 19 per cent.
Andrew Reitzer, Chief Executive Officer of Metcash said because consumers are eating more at home and shopping more at their customers’ supermarkets, this has translated into a strong Metcash result.
“More Australians are holidaying in Australia and shopping at the widely dispersed IGA network of independent supermarkets,” he said.
Metcash will continue to invest in their core businesses to retain their competitiveness against the national chains and reduce costs.
“Another highlight of the year has been the continued reduction in our cost of doing business during the economic downturn, with our primary focus on supply chain improvements and technological innovations to improve warehouse productivity,” Mr Reitzer continued.
Australian Liquor Marketers, the company’s liquor division, generated strong sales and EBITA growth, which was an excellent performance in the face of aggressive price competition from the national chains and market uncertainty caused by changes to ‘pre mixed’ drinks excise.
The company also reported strong performance by Campbells Wholesale within its convenience distribution segment, with solid sales and EBITA, with strong growth in the product categories of foodservice, soft drinks and confectionery.
Despite the unstable trading environment and uncertainties within consumer spending patterns, Mr. Reitzer remains confident about sales in consumer staples, which will continue to be the company’s primary focus.
“We believe that earnings per share growth will be up by 7 to 10 per cent in the 2010 financial year, subject to unemployment and economic conditions not deteriorating above government forecasts”, Mr Reitzer concluded.