Metcash share price storms 8% higher on FY 2022 earnings beat

Metcash had a strong 12 months…

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Key points

  • Metcash has released its full year results for FY 2022
  • Thanks to growth across the business, it delivered strong revenue and profit growth
  • Metcash's underlying net profit of $299 million smashed the market's estimates

The Metcash Limited (ASX: MTS) share price is on the charge on Monday following the release of the company’s full-year results.

At the time of writing, the wholesale distributor’s shares are up 8% to $4.47.

Metcash share price rises on earnings beat

  • FY 2022 group revenue (inc. charge throughs) up 6.4% to $17.4 billion
  • Group revenue (ex. charge throughs) up 5.9% to $15.2 billion
  • Underlying earnings before interest and tax up 17.7% to $472.3 million
  • Underlying net profit after tax up 18.6% to $299.6 million
  • Final dividend of 11 cents per share

What happened during the 12 months?

For the 12 months ended 30 April, Metcash delivered a 6.4% increase in top line revenue to $17.4 billion and an impressive 18.6% jump in underlying net profit after tax to $299.6 million.

The latter compares favourably the market consensus estimate to $279 million, which may explain why the Metcash share price is charging higher today.

Management advised that its “outstanding results” represent its proactive response to the significant challenges associated with COVID-19 and the continued execution of its MFuture strategy. The latter is improving the competitiveness of its independent retail networks.

In addition, the Total Tools acquisition in the Hardware pillar had its first full year under Metcash ownership and boosted its earnings growth. This led to the Hardware pillar reporting a 40.7% increase in earnings, which was complemented by a 4.1% lift in Food earnings and a 9.8% jump in Liquor earnings.

Sales update

Also boosting the Metcash share price has been news that FY 2023 has started strongly. During the first seven weeks of FY 2023, Metcash has achieved group sales growth of 8.6%.

This reflects a 5% increase in Food sales, a 19.8% jump in Hardware sales, and an 8.6% lift in Liquor sales.

In respect to food, management advised that supermarkets sales have been strong due to a continuation of the increased momentum experienced in the fourth quarter and higher wholesale price inflation.

As for Hardware, strong demand and global supply chain challenges are continuing to place pressure on the availability of some product categories. However, there continues to be a solid pipeline of residential construction and renovations activity.

Finally, the Liquor business continues to benefit from strong demand across retail stores and a recovery in on-premise sales.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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