Metcash profit decline a result of “difficult market”

Posted by AFN Staff Writers on 1st December 2011

Australian national grocery wholesaler, Metcash, has reported a 14.3 per cent decline in profit to A$94.4 million for the six months to 31 October 2011.

Metcash’s executive Andrew Reitzer said that challenging operating conditions have persisted due to reduced consumer confidence, highly value-conscious consumer, and continuing deflation.

The profit decline takes into account “significant items and discontinued operations” associated with the company’s Franklins acquisition.

Excluding these costs, Metcash saw a rise in underlying earnings per share of 1.3 per cent from the previous year, to 15.2 cents a share. Operating cash flow rose to A$252.4 million from A$20.2 million in 2011.

Mr Reitzer said, “We continue to face price deflation across a range of categories. There is no doubt that consumers are remaining price conscious in such an uncertain economic climate.

“The impact of price deflation has meant the value conscious consumer is more reluctant to purchase goods unless and until they are on sale. The persistent marketing campaigns by the major self supply chains have impacted the way consumers purchase goods.”

Liquor business report sales increases

Metcash’s ALM business reported a growth in sales of 1.2 per cent from A$1.1 billion in the first half of 2011 to A$1.11 billion.

Metcash said that ALM is currently Australia’s second largest liquor presence, despite “aggressive marketing” by the national chains.

By comparison, Metcash’s IGA Liquor business grew 4 per cent, Cellarbrations grew by 3 per cent, and The Bottle-O grew by 1.3 per cent from the same period in 2011.

Campbells Wholesale

Metcash’s Campbells Wholesale business experienced sales growth of 3.8 per cent from A$819 million in the first half of 2011 to A$850 million. Mr Reitzer said this was largely due to the accelerating decline in traditional cash and carry markets.