Metcash profit in line with guidance
Metcash Limited (MTS) posted a record annual profit of $227.6 million for the year to 30 April 2010. The company also provided guidance of 6-8% growth in underlying EPS for FY11.
Metcash’s result was in line with guidance and was a 12.4% improvement on the previous year’s $202.5 million profit.
The company said the result was struck on a 4.9% rise in wholesale sales from $10.97 billion to $11.51 billion despite persistent low inflation in core grocery categories and the receding effects of the government stimulus package, which boosted sales in 2009.
Looking at other results, EBITA grew 8.6% to $415.4 million, operating cash flow rose 18.8% to $294.7 million and underlying earnings per share grew 8.4% to 32c per share.
Metcash declared final dividend of 15c per share, which it said would be fully franked at 30%.
CEO, Andrew Reitzer, said every division had focused on cost containment in the prevailing low price inflationary environment, while continuing to secure further supply chain improvements and technological innovations to improve warehouse throughput.
“While current trading conditions remain subdued, we are confident of further growth in our earnings per share in the 2011 financial year, subject to economic conditions remaining stable”, Mr Reitzer said.
The company expects the low sales growth in the food and liquor sectors would continue to December 2010.
”This is due to the government stimulus felt in FY09, low food price inflation and interest rate increases (150 basis points in FY2010),” Metcash said.
”Against this background, the company provides guidance of 6-8 per cent growth in underlying EPS for FY11.”
The company said guidance is given subject to a number of observations including comparative underlying FY10 EPS is 32 cps, FY11 would be a 53 week year, interest costs for FY11 are in line with expectations, the loss of the ALH business previously announced to the market and that the results would include a full year of Metcash’s share of Mitre 10 results.
At the close of trade Monday, Metcash shares were trading at $3.85.
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