Metcash forecasts record profit, expansion on the cards

Posted by Daniel Palmer on 5th September 2008

Australian grocery and liquor wholesaler Metcash maintained earnings guidance of after tax profit of almost $197 million on the back of sales revenue expected to pass the $10 billion mark for the first time.

The third largest player in the grocery industry, Metcash came under scrutiny from the ACCC during the recent Grocery Price Inquiry, but Chief Executive Andrew Reitzer was content with the outcome. Pleased with the “creeping acquisitions” proposals and “workably competitive” notion, Mr Reitzer reported at yesterday’s AGM that he had “heard nothing” from the ACCC about a possible investigation into their dominant supply position with regard to independent grocers.

Mr Reitzer believes the future is bright for the company which supplies more than 1000 IGA independently owned grocers. “All our organic and acquisitive growth strategies are working well. In particular our national produce network will be in place by the end of 2008 and we are on track to achieve a run rate of total fresh sales worth $1 billion by the end of the 2009 financial year,” he reported. “We have built up good momentum allowing us to strengthen our trading opportunities, invest in supply chain initiatives and provide greater returns to our shareholders.”

Expansion for the company appears set to extend beyond food, liquor and convenience areas due to fears growth plans in these sectors may be blocked by the ACCC. The pharmaceutical industry has been one such sector under consideration, with an offer made for Symbion Pharmaceuticals (they have since withdrawn from the bidding process).

Specific areas reported to be key to their future plans included a foodservice expansion along with further petrol and convenience penetration and the launch of IGA plus Liquor in WA and SA.