Australian food and grocery wholesaler Metcash’s profits fell 38.6 per cent to A$74.6m during the half year ending 31 October 2016.
While the group’s sales revenue grew 0.3 per cent to AS46.63bn, its underlying profit after tax fell 4.2 per cent to A$82.8m
The IGA and Foodland supplier reported food and grocery sales dropped 1.1 per cent to A$4.49bn compared to the same period in 2016, with supermarket sales falling 1 per cent to A$3.73bn.
Metcash CEO Ian Morrice attributed the results to competitor Aldi’s expansion into South Australia and Western Australia, as well as Woolworths’ move to cut prices.
“Our group results were, however, negatively impacted by an intense trading period in the food and grocery sector, as well as a slow-down in the growth of consumer spending,” Morrice said. “Our focus remains on supporting independent retailers to ensure they are well positioned as ‘The Best Store in Town’, and while both our strategic initiatives and Working Smarter cost savings programme are progressing well and delivering returns, they were insufficient to offset the impact of increased competition in this half year.
“Despite difficult market conditions in the supermarket sector, independent retailers are continuing to invest in growing their businesses, including new stores and refurbishments, and we remain focused on supporting this growth.”
Morrice said price competition would continue through the second half of the financial year, though Metcash expects its second half earning to be greater than the same period in the 2016 financial year.
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