Marketing, groceries, and hardware wholesaler, Metcash [ASX:MTS], has revealed its half-year earnings for the financial year of 2023, presenting higher earnings and profit for the period ending on 31 October.
Group revenue saw an 8.2% increase, totalling $7.7 billion over the first six months of the 2023 financial year. EBIT also climbed 10.3%, positioning the company for upping its interim dividend.
The MTS share price was bolstered by 7% in the past month, however, year to date, it has slipped by 6%, currently down from its peak price of $4.80 per share in May this year.
Source: Marketindex.com
Metcash celebrates higher revenue amid inflationary headwinds
Today, the retail wholesaler presented its results for the FY23 half-year, its business pillars performing off ‘robust demand and sales volumes’.
These factors contributed to an increase in group revenue, EBIT, and profit, allowing the group to raise its dividend.
MTS declared an interim dividend of 11.5 cents a share, up 9.5% on the previous year’s first half.
These were the company’s highlights:
- ‘Group revenue up 8.2% to $7.7bn, and including charge-through by 7.8% to $8.9bn (3yr +31.7% )
- Group underlying EBIT up 10.3% to $255.1m (3yr +63.8%)
- Underlying profit after tax up 9.1% to $159.9m (3yr +76.5%)
- Statutory profit after tax of $125.7m (3yr +182.9%)
- Underlying earnings per share up 13.7% to 16.6 cents (3yr +66.0%)
- Statutory earnings per share 13.0 cents (3yr +177.8%)
- Interim dividend for FY23 up 9.5% to 11.5 cents per share (3yr +91.7%)’
Metcash celebrated strong growth in sales and earnings, saying that this was achieved despite higher inflation and lockdowns threatening businesses.
The company found that Australian shoppers have been prioritising local shopping, with customers reportedly enjoying raised competition and differentiated offers.
Group CEO, Doug Jones, reported a strong balance sheet, with particularly strong sales and demand continuing for the first four weeks of the second half of 2023.
In that time, group sales were reportedly up 6.2%.
Mr Jones said:
‘It has been another pleasing half for Metcash with strong sales and earnings growth in the face of higher inflation and while cycling the impact of extensive lockdowns in 1H22.
‘Importantly, the business continued to build on its record performances post the onset of COVID, achieving exceptional growth over the past three years in all pillars.
‘The increased preference for local neighbourhood shopping continues to be seen in our strong sales performance, with shoppers recognising and enjoying the increased competitiveness, differentiated offer and relevance of our network of independent stores.
‘Feedback from our retailers is that many shoppers have now changed their shopping habits to include local grocery, liquor and hardware stores.’
Source: MTS
MTS addresses supply chains and rising costs
Metcash believes recent supply chain issues have improved but warns they continue to pose a risk for the second half — with further fuel, freight, and labour costs on top.
Uncertainty over inflation levels continues to impact the cost of living for consumers and could result in some challenges seen in customer behaviours and retail networks in the near future.
Mr Jones believes the business has a strong financial position, which should support strategic initiatives, including digital, data, development, and Project Horizon.
The company supported this view with a 9.5% increase in the interim dividend for FY23 to 11.5 cents per share.
As the lockdown era gives way to rising rates, with other macro challenges at play, it will be interesting to see how the second half plays out for MTS.
Metcash’s CFO Alistair Bell also intends to retire in the near term, instigating the hunt for a successor from today.
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Regards,
Mahlia Stewart,
For Money Morning
