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.
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.