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

sdf

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.

Outlook

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

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Broker Notes

Guess which ASX 300 stock was downgraded to sell today

Bell Potter has become bearish on this stock. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX gave up an afternoon lead to close lower today.

Read more »

a gas worker with hard hat and high visibility vest stands cross armed and smiling in front of an elaborate steel structured gas plant.
Share Market News

Morgans names 2 ASX energy shares to buy now

These shares could be top picks for investors with a high tolerance for risk.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Broker Notes

Is the ResMed share price still cheap? What the numbers say

Let's see what analysts are saying about this blue chip as it nears a 52-week high.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Broker Notes

What does Macquarie think REA shares are worth?

Top broker Macquarie has reviewed its rating and price target on REA shares.

Read more »

Three guys in shirts and ties give the thumbs down.
Share Fallers

Why Aurelia Metals, Centuria Office, Meeka Metals, and Resolute shares are tumbling today

These shares are having a tough time on Thursday. Let's find out why.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Clarity Pharmaceuticals, Kelsian, Life360, and Syrah shares are rising today

These shares are pushing higher on Thursday. But why?

Read more »

Woman checking out new TVs.
Broker Notes

Does JP Morgan think JB Hi-Fi shares can keep rising?

The retailer is up 16% for the year to date.

Read more »