Metcash expects 7% – 10% earnings growth
November 30, 2009
Metcash Limited (MTS) reported a post-tax profit of $109.2 million for the six months to 31 October 2009, up 36.5% from $80 million in the previous corresponding period. Looking ahead, Metcash CEO Andrew Reitzer reiterated guidance saying pre-abnormal earnings per share was expected to grow by between 7% and 10% in the current year.
However, Mr Reitzer said this result was despite persisting difficult trading conditions.
“The trading environment is strong, however low price inflation continues to hamper trading opportunities across all of our business pillars,” Mr Reitzer said.
Turning to the current results, Metcash said its normalised post-tax profit was $109.2 million, up 12.3% from $97.2 million last year.
Last year's first half profit included a $17 million charge related to the cancellation of an interest rate hedge.
Metcash said the result was driven by a 6.6% rise in sales $5.6 billion.
“Metcash has continued to show strong growth in sales and earnings, led by our major division IGA Distribution (IGA>D),” Mr Reitzer said.
“We also continued to reduce our cost of doing business as a percentage of gross profit to 63.98%, with our supply chain improvements enhancing the performance of the Group’s cost of warehousing and distribution.”
Mr Reitzer went on to forecast this operation’s revenue would earn over $1 billion this financial year.
Metcash said some of the growth would come from formerly branded Coles stores starting to trade under Foodworks. To date, 6 of the 45 stores previously announced had moved to IGA>D purchasing, with the rest expected to follow in the 2010 financial year.
At the close Monday, Metcash shares were up 12c to $4.68.
However, Mr Reitzer said this result was despite persisting difficult trading conditions.
“The trading environment is strong, however low price inflation continues to hamper trading opportunities across all of our business pillars,” Mr Reitzer said.
Turning to the current results, Metcash said its normalised post-tax profit was $109.2 million, up 12.3% from $97.2 million last year.
Last year's first half profit included a $17 million charge related to the cancellation of an interest rate hedge.
Metcash said the result was driven by a 6.6% rise in sales $5.6 billion.
“Metcash has continued to show strong growth in sales and earnings, led by our major division IGA Distribution (IGA>D),” Mr Reitzer said.
“We also continued to reduce our cost of doing business as a percentage of gross profit to 63.98%, with our supply chain improvements enhancing the performance of the Group’s cost of warehousing and distribution.”
Mr Reitzer went on to forecast this operation’s revenue would earn over $1 billion this financial year.
Metcash said some of the growth would come from formerly branded Coles stores starting to trade under Foodworks. To date, 6 of the 45 stores previously announced had moved to IGA>D purchasing, with the rest expected to follow in the 2010 financial year.
At the close Monday, Metcash shares were up 12c to $4.68.
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