Metcash lifts profit as independents gain ground

Metcash has posted a 10 per cent increase in its profit after tax amid strong food sales and independent grocer performance.

The wholesaler behind supermarkets like IGA and Foodland ended the financial year $283.3 million in the black as more shoppers flocked to independent retailers.

WA is home to 205 IGA stores, 100 Cellarbrations shopfronts, a dozen The Bottle-O’s and 11 Total Tools locations.

Metcash’s overarching revenue rose nearly 9 per cent to $17.3 billion in the 12 months to April 30, while the wholesaler’s underlying earnings (before interest and tax) rose 2.3 per cent to $507.8 million, in line with earlier guidance. 

However, underlying profit after tax declined 2.4 per cent to $275.5 million due to higher finance costs and depreciation linked to the company’s recent acquisitions.

Chief executive Doug Jones said Metcash’s food and liquor businesses had proven resilient in a market dominated by price-cutting campaigns.

“We absolutely are able to compete with them,” Mr Jones said of Metcash’s rivalry with supermarket majors like Coles and Woolworths.

“Choice is the primary ingredient of healthy competition, and we’re confident in our ability to offer that.”

Foot traffic remained steady across the company’s national network of 2,457 independent food stores, with food earnings rising 18 per cent to $248.4 million. 

Revenue in the segment climbed 11 per cent, bolstered by Metcash’s $10 million acquisition of Superior Foods and the opening of 22 new IGA stores, although there were also 31 closures in the same 12-month period.

Liquor sales, meanwhile, grew 3.4 per cent to $5.3 billion, with independent brands like Cellarbrations and The Bottle-O attracting more traffic.  

Even so, earnings in Metcash’s liquor division fell 4.7 per cent to $104.1 million, impacted by easing wholesale price inflation and one-off restructuring costs.

Mr Jones said consumers were increasingly confident shopping at their local liquor outlets, noting that “when the quality of the offer improves, the ranging is tailored to local needs, and the price gap comes down.”

However, hardware remained the group’s weakest performer, with subdued trade activity contributing to a 10 per cent fall in earnings to $189.3 million. 

The segment was impacted by acquisition-related costs and softer demand, though sales rose 2.4 per cent to $2.68 billion.

Metcash last month announced a merger between its Independent Hardware Group and Total Tools, forming a consolidated business under the Total Tools and Hardware Group banner. 

Mr Jones said the restructure was expected to improve alignment across Metcash’s hardware portfolio.

Looking ahead, Mr Jones said the group had made a solid start to FY26, with sales for the first seven weeks up 4.7 per cent. 

A fully franked final dividend of 9.5 cents per share will be paid on 27 August, taking the full-year payout to 18 cents per share.

“We’re encouraged by the momentum heading into the new year,” Mr Jones continued. 

“Our diversified model and strong supplier relationships continue to support our strategy in an increasingly competitive market.”

Metcash shares were up 3.11 per cent in midday trade, changing hands at $3.81 per share in a $4.1 billion market cap.