Metcash has swung to a full-year profit after cycling through impairments, but a drop in food earnings and higher finance costs have hit its underlying result.
Metcash has swung to a $192.8 million full-year profit after cycling through its South Australian contract impairments, but its share price has taken a tumble after a decline in food earnings and higher finance costs weighed on the IGA supermarket supplier's underlying result.
Revenue for the 12 months to April 30 rose 1.8 per cent to $12.66 billion but earnings declined 1.4 per cent to $330 million as growth in hardware and liquor failed to fully offset a decline in food.
Underlying profit fell 3.0 per cent to $210.3 million.
Metcash, which slipped to an impairment-driven $150 million loss in the previous financial year, held its final dividend at a fully franked 7.0 cents per share.
Shares in the company fell by more than 7.0 per cent at Monday's open and were 6.5 per cent down at $2.945 at 1011 AEST.
Despite a 0.3 per cent increase in total food sales to $8.79 billion, food earnings decreased by 3.0 per cent to $182.7 million following a decline in wholesale sales and a $10 million investment in growth initiatives.
Nonetheless, chief executive Jeff Adams said he was encouraged that the decline in non-tobacco sales had slowed for a fourth consecutive half-year amid what he called "challenging market conditions".
Metcash said the supermarkets division will continue to invest in growth initiatives and expects related operating expenditure in FY20 to be in-line with that incurred in FY19.
Total liquor sales increased 5.6 per cent to $3.67 billion, reflecting continued growth for the IBA bannered group and ALM wholesale customers.
Hardware sales declined 0.9 per cent to $2.10 billion amid a slowdown in construction activity and the closure of unprofitable company-owned stores, as well as the loss of a large Home Timber and Hardware wholesale customer in Queensland during the first half of the year.
Hardware earnings increased by $11.9 million or 17.2 per cent to $81.2 million and the company said there appeared to be an improvement in the level of confidence in the network following the May federal election.
METCASH SWINGS TO FY19 PROFIT BUT FOOD UNDER PRESSURE
* Net profit $192.8m vs $150m loss in FY18
* Revenue up 1.8pct to $12.66b
* Underlying profit down 3.0pct to $210.3m
* Final dividend unchanged at 7.0 cents per share, fully franked.