Metcash Limited enjoyed a jump in share price of over 10 per cent yesterday after releasing its AGM presentation.
In the presentation, management gave a breakdown of the company’s performance in FY 2018. It also gave an update on its performance so far in FY 2019.
In his opening address, Metcash Chair Rob Murray said, “We were pleased to report that underlying profit after tax increased 10.7 per cent to $215.6 million. The prior year included an additional 53rd week of trading, so on a comparable basis the increase would be higher.
“This performance represents an 8.9 per cent increase in underlying earnings per share to 22.1 cents.
“The increase in earnings was achieved despite highly competitive and challenging conditions.”
Food, liquor and hardware
According to the presentation, the improvement in FY 2019 food sales that management highlighted in its full-year results in June has continued. There was also a slowdown in the rate of decline of non-tobacco sales.
Mr Murray said the company was “disappointed” about the loss of the Drakes Supermarkets supply contract in South Australia. But he added that he didn’t expect it to have a material impact on its supermarket earnings in FY 2019.
Metcash’s liquor business has also enjoyed strong sales so far in FY 2019. The presentation partly attributed this growth to new contract customers. It predicted the liquor market to continue growing during FY 2019, although not dramatically.
The company’s hardware business is performing well too, the presentation said. Growth in hardware sales has continued, although less strongly than in the first half of FY 2018.
“It is important to note that supporting the ongoing success of independent retailers across our food, liquor and hardware pillars continues to be at the heart of our strategy,” Mr Murray said.
“We have a strong balance sheet with the capacity to invest, and the next phase of our strategy will focus on delivering growth initiatives and cost efficiencies.”
In a separate press release, Metcash also announced a long-term supply deal with Foodland.