Metcash (ASX:MTS)The company, a service provider to Australia’s leading wholesalers and independent retailers, has reported its financial results for the first half of its 2025 financial year to 31 October 2024. The company’s diversified portfolio strategy continued to deliver revenue growth, but it faced challenges in certain segments.

Main financial results

Metcash reported a 6.3% increase in group revenue to $9.6 billion. Excluding charge-through sales, sales increased 8.1% to $8.5 billion.

Despite the strong sales performance, underlying EBIT was flat at $246.1 million, reflecting the complex situation across the three core pillars of Food, Alcohol and Hardware. Statutory profit after tax increased by 0.6% to $141.8 million, while real profit after tax decreased by 5.5% to $134.6 million.

Underlying earnings per share (EPS) was 12.3 cents, down from 14.7 cents in the year-ago period.

The company declared an interim dividend of 8.5 cents per share, fully franked, with a payout ratio equal to approximately 70% of underlying profit after tax.

Segment performance

The food segment delivered a solid performance, with sales increasing 18.8% to $4.2 billion (excluding tobacco). This growth was supported by the acquisition of Superior Foods in June 2024, which increased revenue by $554.8 million. Food segment profits increased 17.9% to $119.9 million, benefiting from strong trading performance across supermarkets, Campbell’s & Convenience, and the integration of Superior Foods.

Alcoholic beverages also showed resilience, with sales increasing 2.1% to $2.5 billion. Independent retailers continue to outperform chains with customized and local product offerings. However, alcohol EBIT decreased slightly to $49.1 million due to lower strategic purchases and higher costs.

In contrast, the hardware sector faced headwinds due to a sharp decline in trade activity. Total hardware sales increased 2.5% to $1.8 billion due to acquisitions and new store openings. However, due to cost pressures and intense competition in the professional tools market, the segment’s sales decreased by 5.6% and EBIT decreased by 15.1% to $93.9 million.

outlook

Group CEO Doug Jones said: “Our diversified portfolio strategy continues to deliver results in the face of a challenging external environment.” He showed confidence in his abilities.

Metcash aims to maintain growth in its food and liquor pillars while implementing aggressive cost control initiatives in hardware. The company’s new mega-distribution center in Victoria will be operational from mid-2024 and is expected to increase efficiency and support future growth.

Metcash stock is trading 3.37% higher at $3.23.