The Metcash Limited (ASX: MTS) share price is starting the week strongly.
In morning trade, the wholesale distributor’s shares are up 9% to $3.91.
This follows the release of the company’s record full-year results this morning.
Metcash share price jumps on full-year results
- Group revenue up 6.2% to $15.8 billion
- Total revenue (including charge-through) up 5.7% to $18.1 billion
- Underlying profit after tax up 4.6% $307.5 million
- Final dividend of 11 cents per share
- Full-year fully franked dividends up 4.7% to 22.5 cents per share
What happened in FY 2023?
For the 12 months ended 30 April, Metcash delivered record group revenue of $15.8 billion.
While this was broadly in line with what Goldman Sachs was forecasting, it has fallen short of the analyst consensus estimate of $16,241 million.
Management advised that its record top-line performance reflects “growth in each pillar building on the strong sales performance over the prior two years.”
Group underlying earnings before interest and tax (EBIT) increased 8.1% to a record $500.8 million, with earnings growth in all pillars. Management advised that this reflects “continued strong demand, good operating discipline and the success of strategic acquisitions and initiatives.”
The Food pillar continued to perform well delivering EBIT growth of 3.8% for the year. Things were even better in the Liquor pillar, which reported an 8.9% increase in EBIT. But the star of the show was the Hardware pillar, which “continued to build on the exceptional earnings growth over the past two years, delivering a further 16.8% increase in EBIT.” This was driven by robust underlying demand and the increased contribution from IHG and Total Tools.
This ultimately led to Metcash reporting an underlying profit after tax of $307.5 million, which was up 4.6% year on year. Positively, this was ahead of what both Goldman Sachs ($281 million) and the market ($304 million) were forecasting.
Outlook
The good news is that FY 2024 has started positively. Management advised:
Solid sales growth has continued in the first seven weeks of FY24 with all pillars continuing to perform well. Group sales increased 2.3%, with the rate of growth in Food similar, and Hardware up, compared to 2H23.
However, management has warned that the cost of living is starting to bite. It said:
While demand continues to be solid in all pillars, the impact of higher interest rates and cost of living has started to impact consumer confidence and the behaviour of some customers and shoppers in our retail networks.
The Metcash share price is now down 11% over the last 12 months.
