The Metcash Ltd (ASX: MTS) share price is up more than 2% after the business gave a trading update.
This business is best known as the supplier of IGA supermarkets.
It owns Independent Hardware Group (IHG), the second-largest player in the Australian hardware market, and it’s also the leading hardware wholesale partner to independents. Hardware brands include Mitre 10, Home Timber & Hardware, Total Tools, Thrifty Link Hardware, Design 10, Alpine Truss and Bianco. Metcash also owns Total Tools.
The company also supplies various independent liquor retailers, including Cellarbrations, Thirsty Camel, Bottle-O, IGA Liquor, Duncans and Porters Liquor.
Trading update
Metcash released a trading update for the ten months to 25 February 2024, showing that total sales were up 0.9% year on year. Growth is helpful for the Metcash share price.
It said the food and liquor pillars “continued to perform well”, supported by their “improved competitiveness and differentiated value proposition.”
Total food sales excluding tobacco were up 5%, but were flat including tobacco. Metcash revealed there had been volume growth in the year to date, while inflation continued to moderate – in the financial year to date the inflation figure was 5.3%, but for February it was 3.1%.
Metcash reported that total liquor sales were up 1.6% for the 10-month period.
In the hardware division, the company said demand has remained “subdued”, though the business continued to perform “better than the market” and remains “ideally placed with leading market positions to capitalise on an improvement in consumer confidence and activity levels.”
Total hardware sales are up 2.4%, with IHG sales down 0.6% and Total Tools sales up 16.9%.
Metcash said there is a continued strong focus on costs, interest and working capital.
The company believes it remains “well-positioned for future growth and strong returns through the cycle with a resilient and diversified business portfolio”.
Final thoughts on the Metcash share price
The Metcash share price is up more than 10% since the start of 2024. It’s not as cheap as it was, but it still has a relatively low price/earnings ratio (p/e ratio) and a high dividend yield. I believe it could be a solid performer, particularly once the hardware sector sees more demand.
