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Metcash profit drops, CEO to retire

Metcash-building

Food and grocery wholesaler Metcash’s full-year net profit has fallen 20.6 per cent, but cost savings and higher sales have helped it restart dividends.

The company says net profit for the year to April 30 fell to $171.9 million, but sales revenue rose 5.4 per cent to $14.12 billion, helped by a 53rd trading week and revenue from the home timber and hardware business that was acquired in October 2016.

“We continued to see positive earnings momentum in both Liquor and Hardware, while in Food the impact of intense competition and weak economic conditions in Western Australia were largely offset by the benefit of the 53rd trading week, Working smarter and other cost savings,” chief executive Ian Morrice, said.

Metcash said it was restarting shareholder payouts on the back of a stronger-than-expected balance sheet and declared a fully franked final dividend of 4.5 cents a share.

The IGA and Foodland supplier on Monday said that in the first six weeks of FY18, sales in the food business had continued to be impacted by competitive pressure and difficult economic conditions in Western Australia.

It expects these external headwinds to continue, but says savings from its Working Smarter program could help mitigate some of the impact of difficult market conditions.

The company earlier said Morrice will retire as CEO in 2018, after completing five years in the role.

Morrice has been on the company’s board since June 2012, and was appointed group chief executive in June 2013 after initially joining the Metcash board as a non-executive director.

“Ian has made a significant contribution to the transformation and growth of Metcash,” said Rob Murray, Metcash chair. “He successfully led a number of key strategic initiatives, including the ongoing transformation program, divestment of our automotive business and the acquisition of Home Timber & Hardware. We now also have a very capable management team in place to take the business forward.”

“The board has been undertaking a comprehensive process of succession planning following earlier advice from Ian that he was considering retiring at the end of five years in the role,” Murray said. “We expect to be able to make an announcement on a successor in the near future.”

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