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Metcash maintains momentum

Metcash has sustained its growth, with a 1.2 per cent increase in EBITA to $206.2 million for the first half of its financial year, ending October 31.

The result was achieved on a 3.5 per cent rise in wholesale sales from $6.07 billion in 1H12 to $6.28 billion.

According to the company, the growth in EBITA was achieved despite continuing headwinds including tough trading conditions, continuing price deflation and aggressive marketing campaigns being run by the major self supply chains.

Andrew Reitzer, CEO of Metcash, said the core business remains strong and acquisitions are adding value.

“Revenue, underlying earnings and cash flows are all strong. Our net working capital position has improved and our strategy of diversifying the business is beginning to show results,” he said.

The food and grocery business increased sales by 0.4 per cent to $4.6 billion, however EBITA fell 5.4 per cent to $175 million over the same period.

Increased sales as the result of the Franklins acquisition were largely offset by the impact of the Campbells warehouse closures and the loss and closure of a number of stores including the Cornetts/Walters restructuring. Savings from the Campbells warehouse closures are expected to have a favourable impact in 2H, as the full impact of the wind down and closures are realised.

ALM continued to perform strongly with sales up 14.9 per cent and EBITA growing 26.7 per cent to $16.6 million. The new LMG sales volumes began in October.

The hardware and automotive business, inclusive of the new ABG business, increased 6.3 percent to $454.2 million compared to 1H12 while EBITA has grown 72.4 percent to $15 million.

The strong performance is a result of network expansion, improved buying prices and a stronger market presence and the contribution of the new ABG business.

While Mitre 10 trade sales are slightly behind the last half due to a slowing building construction sector retail sales broadly compensated for this.

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