Metcash' FY results benefit from Foodland acquisition

Australian grocery wholesaler Metcash released its figures for the full year ending April 30, 2006. In this business year revenues increased by 17.1 per cent to AU$8.25bn (US$6bn), and net profits soared 23.8 per cent to AU$128mn (US$93mn). EBITA rose 19.5 per cent to AU$226.9mn (US$165mn). Metcash is positive about the integration of its Foodland acquisition (60 stores and a wholesale operation bought in November 2005) and its chief executive Andrew Reitzer expressed an appetite to acquire the loss-making Franklins operation (77 discount stores owned by South African retailer Pick ‘n Pay).

“IGA retailers are absolutely chomping at the bit for new stores, so yes we’d be keen if Franklins became available”, Reitzer told Australian Associated Press, pointing out that it was very difficult to get to new sites due to factors like acquiring development and building approvals. According to Metcash the integration of Foodland has proceeded succesfully and Reitzer expects this to deliver incremental EBIT in the range of AU$80mn (US$58mn) to AU$90mn (US$65mn) for the 2007 business year. Further optimism comes from the newly re-branded IGA chain of 171 stores across Western Australia.