AU: Metcash plunges on profit downgrade
Providing a trading update to its shareholders at the AGM, Metcash said all divisions were performing ‘‘to plan’’ with the exception of its flagship food and grocery business.
Metcash said because of the sustained downturn in the trading environment it now expected underlying earnings per share dilution for the 2013-14 financial year to be in the high single-digit range.
The company’s grocery arm, which is in a cut-throat battle with supermarket giants Woolworths and Coles, has suffered recently from market share loss to its bigger grocery rivals and investment in its marketing and promotions to attract price-conscious shoppers.
Last financial year Metcash’s food and grocery division saw pre tax earnings slide 5 per cent to $377.9 million with its margins sliding to 4.14 per cent from 4.26 per cent. The company also blamed deregulated trading hours in WA and Queensland as well as store closures for its weaker earnings performance.
New Metcash boss Ian Morrice warned that general trading conditions remained tough and were unlikely to recover until there were stable macro-conditions, especially around the election, movements in the Australian dollar and house prices.
Consumers remained cost conscious, meaning high promotional activity at the supermarkets was set to continue which would also drive price deflation.
Source: www.smh.com.au
