Metcash Limited, the the operator of IGA Supermarkets, Mitre 10 Hardware stores and Cellarbrations Liquor has posted a record profit up 12.4 percent from $227.6 million for the year.
Metcash’s strong profit is attributed to a 4.9 percent increase in wholesale sales from $10.97 billion to $11.51 billion. This increase was moderated slightly by the receding effects of the Federal Government’s Stimulus package towards the end of the reporting period.
Metcash Chief Executive Officer, Mr Andrew Reitzer was confident the group had contained costs effectively while the Australian economy recovered from the GFC, leading the the record profit announcement.
“We are pleased with the result, as we continue to operate in a low inflation environment, the positive effects of last year’s government stimulus package have receded and interest rate increases have impacted on household budgets.”
“All divisions have focused on cost containment in the prevailing low price inflationary environment, while continuing to secure further supply chain improvements and technological innovations to improve warehouse throughput.
“While current trading conditions remain subdued, we are confident of further growth in our earnings per share in the 2011 financial year, subject to economic conditions remaining stable”, concluded Mr Reitzer.
Metcash’s IGA Supermarkets and Liquor maintained its market share at 19.9 percent despite softer market conditions and strong competition from both Woolworths and Coles.
Metcash’s grocery distribution business, IGA Distribution, increased sales to $346.5 million for the group. IGA Supermarket Stores lead IGA Distribution’s growth in the sector, increasing sales by 4.1 percent across the existing store locations, as well as growing the business further through new locations.
Metcash expects that the low sales growth in the food and liquor sectors will continue to December 2010 due to the lessening of government stimulus felt last year, combined with successive interest rate increases from the RBA in the last 9 months. With this in mind, growth for Metcash is expected to hold in the 6-8 percent growth range over the next financial year.