Metcash Ltd (ASX: MTS) shares are on the move on Tuesday.
In morning trade, the ASX 200 share is up almost 2% to $3.45.
This follows the release of an announcement from the wholesale distributor before the market open.
What did this ASX 200 share announce?
Investors are responding positively to the release of a significant strategic update and its earnings guidance for FY 2025
In respect to the former, the ASX 200 share has announced plans to merge its Independent Hardware Group (IHG) and Total Tools businesses into a single entity, dubbed the Total Tools and Hardware Group.
Management highlights that the move is designed to create "one leading and scaled hardware business." It believes it is positioning the company to better serve both trade and DIY home improvement customers across Australia.
The newly merged division will include major brands like Mitre 10, Home Hardware, and Total Tools, and will be led by Scott Marshall, the current CEO of IHG. But as part of the shakeup, Richard Murray, CEO of Total Tools, will leave the company.
The combination of these businesses is expected to enhance strategic alignment and unlock growth potential by leveraging their strengths. The new structure is also expected to deliver scale benefits, simplify operations, and offer a platform for accelerated growth.
Commenting on the plans, the ASX 200 share's CEO, Doug Jones, said:
Merging IHG and Total Tools Holdings has been part of our medium to longer term considerations since the acquisition of Total Tools in 2020. The creation of an even stronger and more resilient hardware business now is important not only in the context of current market conditions, but also for ensuring the business and our independent members and franchisees are ideally positioned to maximise the benefits from the anticipated market improvement.
Combining the two businesses underpins our commitment to maximise the opportunities for profitable growth in the sector.
FY 2025 earnings guidance
In addition to the hardware news, Metcash also provided the market with an earnings update.
According to the release, the ASX 200 share's group EBIT is expected to be between $504 million and $508 million. This comprises:
- Food: $245 million–$249 million
- Liquor: $102 million–$105 million
- Hardware: $186 million–$190 million
- Corporate costs: ($33 million–$35 million)
In light of this, the company now expects to report an underlying profit after tax of between $273 million and $277 million for FY 2025. This is slightly ahead of market consensus.
