Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

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Metcash Ltd (ASX: MTS) shares are on the move on Monday morning.

In early trade, the ASX 200 stock is down 2% to $3.68.

This follows the release of the wholesale distributor's FY 2024 results.

ASX 200 drops on FY 2024 results

  • Group revenue up 0.7% to $15.9 billion
  • Revenue including charge throughs up 0.7% to $18.2 billion
  • Underlying EBIT down 0.9% to $496.3 million
  • Underlying profit after tax down 8.2% to $282.3 million
  • Total dividends down 13.3% to 19.5 cents per share

What happened during the year?

For the 12 months ended 30 April, Metcash reported a modest 0.7% increase in group revenue to $15.9 billion. This reflects growth in the Hardware and Liquor pillars, which offset a small decline in the Food pillar. The latter was driven by lower sales in tobacco.

The company's group underlying EBIT decreased by 0.9% to $496.3 million in FY 2024. This was due to earnings growth in Food and Liquor being offset by lower earnings in Hardware and increased corporate costs.

Management notes that the Food pillar continued to perform well in an environment of increased value-conscious shopping. It believes this provides further evidence of its shift to a sustainable and resilient business model. Food earnings increased 3% to $210.1 million for the 12 months.

Metcash's Liquor pillar increased its earnings by 4.9% to $109.2 million. This reflects its diversified customer strategy, the ongoing preference for localised liquor offers, strategic buying, and good cost management.

Things weren't quite so positive for the Hardware pillar, which reported a 3.8% decline in earnings to $210.9 million. This reflects rapidly slowing builder confidence and reduced market activity, as well as significantly increased competition for the Total Tools business in the second half.

This ultimately led to group underlying profit after tax falling 8.2% to $282.3 million and the Metcash board cutting its fully franked final dividend by approximately 23% to 8.5 cents per share. This brought its total dividends to 21.5 cents per share in FY 2024, which is down 13.3% year on year.

Management commentary

The ASX 200 stock's CEO, Doug Jones, was pleased with the results. He said:

I am pleased to report that the Company has delivered strong results for FY24, a year in which there was a further decline in the external environment. The results have been underpinned by our strategy, which is clearly working, and the disciplined execution of key initiatives. Operationally, all pillars performed well, in line with their strategic positioning, demonstrating resilience in the current softer market conditions.

Outlook

Total group sales for the first seven weeks of FY 2025 have increased 2.2%. However, this includes the acquisition of Superior Foods. Excluding this business, sales were flat.

Management commented that it believes "Metcash is well positioned with the plans, platform, capabilities and diverse business portfolio for future growth and strong returns through the cycle."

Following today's decline, this ASX 200 stock has now dropped into the red on a 12-month basis.

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.

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