Wholesale distribution and retail group Metcash's (ASX: MTS) underlying profit after tax slipped 2.4 per cent to $268.8 million as resilient Food earnings were offset by softer results in Liquor and Hardware & Tools.
Metcash, which supplies major brands including IGA supermarkets, Cellarbrations and Mitre 10, reported full-year revenue of $19.6 billion for FY26, up 0.7 per cent on the prior year, although excluding the impact of declining tobacco volumes, group revenue rose 3.8 per cent for the 12 months to 30 April 2026.
Group EBITDA lifted 1.9 per cent to $761.7 million, while reported EBIT fell 0.8 per cent to $503.7 million.
Stripping out $12.4 million in one-off strategy and integration costs, underlying EBIT rose 1.6 per cent which delivered an underlying profit that landed within the $268 million to $270 million guidance range Metcash issued in its May trading update.
Metcash CEO Doug Jones says that despite mixed trading conditions across its markets, the group delivered "solid earnings, strong cash generation and continued progress on our long-term strategic priorities".
“Our scale, our national supply chain, and our deep relationships with independent retailers remain powerful competitive advantages," says Jones.
"We now support 105,000 customers, 6,300 bannered stores and reach 95 per cent of Australians – a unique platform that continues to generate resilient, high-quality cashflows.
“We are winning with independents because we combine the benefits of scale with the agility and community connection of local ownership.
"This combination is difficult to replicate and continues to underpin our performance across all pillars.”
Metcash delivered a 5.4 per cent increase in EBIT for its Food division, which Jones says was supported by "strong execution" in Supermarkets and sustained momentum in Foodservice & Convenience.
"Ex-tobacco sales grew 5.4 per cent, and the IGA network is more competitive than ever.
"Our Foodservice & Convenience business continued to scale rapidly, with a sales CAGR (compound annual growth rate) of 38.2 per cent since FY23.
“In Liquor, we grew revenue by 1 per cent, which was ahead of the market, and increased share to 32.3 per cent.
"While EBIT was lower, the business delivered a stronger second half, supported by diversified channels and our independents’ agility, shopper-led range, value and service."
Metcash revenue in Hardware & Tools grew 4.3 per cent with improved momentum in the second half across both Hardware and Tools.
"Total Tools delivered pleasing earnings growth, while Hardware’s earnings were subject to softer trade demand in parts of the network, particularly in Victoria and Tasmania," says Jones.
"The integration of the Total Tools & Hardware Group is now complete, and the combined business is well positioned as we target a return to mid-cycle margins."
Operating cashflow across the group increased 3.5 per cent to $558 million, with the three-year average cash realisation ratio improving to 104 per cent.
The Metcash board declared a fully franked full-year dividend of 18c per share, representing a payout ratio of 74 per cent of underlying profit after tax. Metcash also suspended its dividend reinvestment plan today.
The group is also targeting $25 million in annualised cost savings in FY27 through a cost-out program spanning procurement, logistics and overhead efficiencies.
Early FY27 trading data covering the first seven weeks showed total group sales up 2.4 per cent excluding tobacco, with Total Tools posting sales growth of 9.5 per cent.
The company says food and Liquor experienced a subdued May, as consumer sentiment softened in response to geopolitical uncertainty and cost-of-living pressures.
However, both pillars have "recovered well" in the first three weeks of June, trading in line with FY26 growth levels as conditions stabilised.
Jones says the group's technology investments, including a deepening partnership with Microsoft, are positioning Metcash and its independent retailers for the next phase of competitive differentiation.
“Looking ahead, we are well positioned with a unique combination of scaled assets and capabilities that generate resilient, quality cashflows," says Jones.
"Our AI-ready technology is positioned to leverage Microsoft’s broad enterprise stack to unlock new levels of insight, efficiency and capability across our network.
"Our competitive advantages continue to strengthen, our digital platforms are scaling and our retail networks are growing.
"Metcash enters FY27 with strong momentum, a clear strategy and a deep commitment to helping independent retailers thrive in their local communities."
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