Metcash loses market share

June 24, 2013
The Age

Supermarket group Metcash has lifted underlying full year profit by 6.9 per cent to $281 million but has lost market share in its core grocery business as it beds down major restructuring and new acquisitions.

The company promised a review of its food and grocery operations as it recorded revenue of $13.1 billion for the year to April 30 and a reported net profit after tax (NPAT) of $206 million.

The result is up $129 million on the previous year, when the company recorded restructure costs and impairments.

Metcash shares jumped 6.7 per cent to $3.69 in early trade.

The retailer behind the IGA and Franklins supermarket chains suffered a 2.3 per cent fall in sales in its core food and grocery business to $9.1 billion as it closed stores but achieved 35 per cent earnings growth, to $47 million, in its liquor business.

Outgoing chief executive Andrew Reitzer said Metcash remained in a strong position and was capable of weathering difficult economic conditions.

‘‘It is a challenging time for the independent retail sector with consumer confidence low and the self-service supermarket chains locked in a marketing war,’’ he said.

Mr Reitzer also said Metcash had felt the impact of ongoing price cuts in the supermarket business.

‘‘The impact of deflation has continued and we have been affected by the deregulation of trading hours in Western Australia,’’ he said. ‘‘This, together with some store closures, has resulted in a small decline in our market share in Metcash Food and Grocery.’’

Incoming chief executive Ian Morrice, who takes over from Mr Reitzer on June 30, said a review of the food and grocery operations to respond to deflationary and competitive market conditions would be a key priority.
AAP