The Metcash Ltd (ASX: MTS) share price is up 3% after reporting its FY25 half-year result.
Metcash supplies a large number of independent retailers including IGA supermarkets, Cellarbrations, The Bottle-O, IGA Liquor, Porters, Thirsty Camel and more. Metcash also owns a number of hardware brands including Total Tools, Home Hardware, Mitre 10, Alpine Truss and Bianco.
Metcash FY25 half-year result
Here are some of the highlights from the company’s HY25 report:
- Group revenue increased 6.3% to $9.6 billion
- Group EBIT was flat at $246.1 million
- Underlying net profit after tax (NPAT) fell 5.5% to $134.6 million
- Reported net profit rose 0.6% to $141.8 million
- Interim dividend per share of $0.085
Let’s look at the performance of the individual divisional pillars.
Metcash reported that its total food sales increased by 11.5% to $4.59 billion, with supermarket revenue excluding tobacco growing by 3.1% to $3.25 billion. The acquisition of Superior Food – which supplies other businesses – contributed $554.8 million of sales, it saw year on year growth of 6.1% thanks to new contract wins. Food EBIT jumped by 17.9% to $119.9 million.
Liquor revenue grew by 2.1%, though cost of living pressure is driving a focus on value and impacting consumption levels, particularly on-premise. Even so, the independents’ localised and competitive offer “continued to drive share gains in a challenging market.” Liquor EBIT declined 3.3%, partly due to cost inflation and the prioritisation of network volumes.
In the hardware segment, total revenue rose by 8.7% to $1.35 billion, though including charge-through revenue the total revenue only increased by 2.5% to $1.83 billion. Network retail sales declined by 1.1% to $2.3 billion. Metcash revealed that EBIT dropped 15.1% to $93.9 million because of weaker trade activity and retail margin pressure, as well as higher costs. There has been “intense price competition” in the professional tools market.
Outlook for the Metcash share price
The company revealed that in the first four weeks of the second half of FY25, total sales were up 8%. It benefited from the inclusion of Superior Foods, which saw growth of 6.1% and is wining new customers. Total supermarket and Campbells & Convenience sales were up 2.9% excluding tobacco.
Liquor sales were up 4.4%, however wholesale sales to on-premise customers were flat.
In hardware, excluding Total Tools, sales were up 3.6% (though down 2.1% excluding Alpine Truss and Bianco), while Total Tools sales were up 2.6%.
While the HY25 period was challenging, it’s good to see that sales are improving and that acquisitions are helping. If there’s a recovery of building activity then this would help Metcash shares, but it’s difficult to say when that will be or if it will happen. For now, there could be other, more appealing ASX dividend shares to buy.
