Metcash share price higher despite reporting first-half earnings decline

Metcash has released its results. How did it do?

| More on:
Woman chooses vegetables for dinner, smiling and looking at camera.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Metcash Limited (ASX: MTS) share price is on the move on Monday.

At the time of writing, the wholesale distributor's shares are up 3% to $3.65.

This follows the release of the company's half-year results this morning.

Metcash share price higher following results release

  • Revenue up 1.3% to $7.8 billion
  • Revenue including charge-through up 1.6% to $9 billion
  • Underlying profit after tax down 10.9% to $142.5 million
  • Statutory profit after tax up 12.2% to $141 million
  • Fully franked interim dividend down 4.3% to 11 cents per share

What happened during the half?

For the six months ended 31 October, Metcash reported a 1.3% increase in revenue to $7.8 billion. This reflects growth in all pillars despite cycling a very strong sales performance in the prior corresponding period.

Things were a little mixed for the company's earnings, though. Solid earnings growth in Food and Liquor was offset by lower earnings in Hardware and increased corporate costs.

The Food pillar delivered earnings growth of 3.6% to $101.7 million and the Liquor pillar posted earnings growth of 3% to $50.8 million, whereas Hardware earnings declined 5.1% to $110.6 million.

Management notes that while sales in both the IHG and Total Tools retail networks have been relatively resilient in a more challenging market, increased cost pressures had an adverse impact on first-half earnings.

In light of this earnings decline, the company was forced to cut its interim dividend by 4.3% to 11 cents per share.

Management commentary

Metcash CEO, Doug Jones, was pleased with the half. He said:

The diversity and resilience of our portfolio of businesses are clearly evident in the first half results for FY24. Standouts for the half include continuation of sales growth on a very strong comparative period, and in more challenging conditions, as well as the outstanding cash performance.

Sales growth was delivered in all pillars and in our independent retail networks, with the differentiated offer of the independent network and its compelling value proposition continuing to resonate with shoppers, builders and tradespeople. Our independent retail networks are healthy, and importantly they are continuing to reinvest to further lift their overall store quality and competitiveness.


The good news for the Metcash share price is that the company's sales growth continued in November.

For the first four weeks of the second half, sales were up 0.8% on the prior corresponding period. Management commented:

The Food and Liquor pillars are performing well, supported by their competitiveness and differentiated value proposition. Hardware continues to perform better than the market and remains ideally positioned in the detached home and professional tools segments to capitalise on an improvement in consumer confidence and activity levels.

No earnings update was provided. However, Metcash expects to deliver between $14 million to $16 million of annualised savings from its cost optimisation program in the second half.

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 recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Hand with Australian dollar notes handing the money to another hand symbolising ex-dividend date.
Share Market News

Morgans says these ASX shares are buys (with special dividends to come)

Here's what the broker is saying about these shares.

Read more »

Investor sitting in front of multiple screens watching share prices
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave the thumbs up to these ASX shares last week. Why are they bullish?

Read more »

Man with rocket wings which have flames coming out of them.
Broker Notes

These ASX shares could rise 30% to 50% in 12 months

Big returns could be on the cards for owners of these shares according to analysts.

Read more »

View from below of a man with a shovel standing by a hole he has dug in the garden, with blue sky in the background.
Resources Shares

Here's why I'm steering clear of Core Lithium shares

Lithium has bottomed out over the past year, but here's why this is NOT the bargain stock to buy.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Share Market News

Why these 4 ASX 200 shares grabbed the Motley Fool's headlines this week

From stellar earnings results to a multi-billion-dollar acquisition approval, these four ASX 200 shares made a big splash this week.

Read more »

A happy older couple relax in a hammock together as they think about enjoying life with a passive income stream.
Investing Strategies

I'd aim to turn a $20,000 savings account into $25,400 of passive income

It doesn't matter if you don't have a pile of cash to start investing. The important thing is to start.

Read more »

A businessman hugs his computer and smiles.

3 ASX shares to buy and hold forever

I like these stocks as ultra-long term ideas.

Read more »

A man with grahpics of robot arms, indicating a share price movement in ASX robotics and tech companies
Share Market News

Here's how the ASX 200 market sectors stacked up this week

Tech shares led the pack for a second week, clocking a near 10% gain over the fortnight.

Read more »