Metcash reported on Thursday northbound results but behind the numbers were the wholesale grocer's shrinking income, which the company admitted had plunged by more than 62 per cent in the past 12 months leading to end of April 2012.
Overall sales, the company said, inched up a bit in the period, leading to an underlying profit of $262.5 million, which grew by 2.5 per cent.
But Metcash's full year revenue was pulled by 0.8 per cent to $12.3 billion, leaving a profit of only $90 million in the period, a far cry from the $241.4 million of profits that the grocery and liquor wholesaler had posted in the previous year.
The latest figures, according to Metcash Chief Executive Andrew Reitzer, were in line with the guidance that the company had previously published, impressive enough, he noted, considering the prevailing "tough trading conditions."
Metcash has so far registered earnings before interest, tax and amortisation (EBITA) of $451.2 million in the year, mustering for the firm a rise of three per cent from the previous financial results.
The company blamed the difficult retail condition that has been battering the sector in the past two years for its retreating profits, which this year was further complicated by the price wars waged by Metcash's premium customers - Coles and Woolworths.
Specifically, the high value of the Australian dollar and consumers' unwillingness to spend more greatly contributed to the plunging numbers not only of Metcash but the whole retail industry, Mr Reitzer said.
"The group has dealt with a range of challenging issues, including weak consumer sentiment, the strong Australian dollar and a marketing war between the two national grocery chains, which has contributed to the deflation experienced in dry grocery and fresh product," Metcash said.
Also, acquisition and restructure moves in the period plus impairment led to a profit hit of more than $176 million, the company revealed.
Nonetheless, Mr Reitzer believes that Metcash investors should be pleased by the company efforts of keeping its dividend payout ratio of 82 per cent of underlying earnings per share.
That means Metcash would be issuing full-year dividend payments of 28.0 cents per share, with the cheques, the company said, to be sent out starting July 9 this year.
But Metcash, Mr Reitzer said, would not set aside its expansion plans and continue to pursue growth opportunities that will be presented to the company, which he added, will be financed by issuing new shares that would raise some $375 million in the process.
Major acquisition on sight is that of car parts seller Automotive Brands Group (ABG), 75.1 per cent of which will soon be purchased by Metcash for $53.8 million.
"We are very pleased that the Automotive Brands Group (ABG) will join Metcash," Mr Reitzer declared, adding that the brand should be fully acquired by the firm over the next three years at the earliest.
The move on ABG, he added, represents a good buy for Metcash "and is a very good fit for us operating a highly effective customer focused business that fits well with our successful model of servicing our grocery, hardware and liquor retailers."
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