Metcash new distribution centre and FY22 full-year results

by | Jun 27, 2022

Mitre 10’s wholesaler and distributor, Metcash has today announced that it will build a new Distribution Centre (DC) in Truganina, Victoria. The announcement comes after Metcash signed a long-term lease with the Goodman Group for the construction and leasing of a new ‘best in class’ wholesale Distribution Centre.

Spanning 115,000 square metres, the new development will cost $70 million to set up and replace the existing DC in Laverton.

The new DC is expected to further improve the competitiveness of its Victorian independent retailers through the delivery of greater efficiencies while providing access to a wider range of products. It is also expected to benefit local suppliers by providing an efficient route to market and better access to its extensive distribution network.

Metcash Chief Executive Officer, Doug Jones said he was delighted to announce the significant long-term investment for Victorian independents. Construction of the DC is scheduled to commence in the first half of FY23, with completion expected mid-2024.

The release of Metcash’s FY22 financial results coincided with the announcement, showing an 18.6 per cent rise in underlying profit after tax to $299.6 million. In addition, earnings rose 17.7 per cent to $472.3 million while revenue grew by 5.9 per cent to $15.2 billion.

On a statutory basis, Metcash profit after tax was up by 2.7 per cent to $245.5 million which Metcash says was backed by strong sales and earnings in all divisions sustained by a shift in consumer behaviour. 

Hardware sales increased 20.5 per cent or 18.3 per cent on a normalised basis to $3.1 billion reflecting significant growth in both Independent Hardware Group (IHG) and Total Tools and the impact of acquisitions, according to Metcash.

Combined sales in the IHG and Total Tools retail networks increased nine per cent to $4.4 billion. An additional 20 joint venture and company-owned stores were acquired during the year which added $95 million of sales.

IHG’s sales increased 12.5 per cent to $2.8 billion reflecting the impact of inflation and volume growth in trade. Trade sales represented 64 per cent of the sales mix while product categories most impacted by the tight supply conditions included timber, LVL, plaster and insulation.

Total Tools sales increased to $367 million reflecting increased trade activity and the impact of additional majority-owned joint venture stores. The network continued to expand, with a further 11 stores added bringing total stores to 100.

Hardware online sales also increased by 55 per cent to represent six per cent of network sales, reflecting the impact of COVID-related lockdowns, increased basket size and conversions.

Mr Jones said he was pleased to present Metcash’s FY22 results for the first time as CEO.

“Record sales growth led to a significant increase in underlying earnings and returns to shareholders. The FY22 results were underpinned by the success of our MFuture initiatives designed to further improve the competitiveness of our retail network, a continuation of the local neighbourhood shopping trend and the success of recent strategic acquisitions,” Mr Jones said.

“The number of external challenges increased in the second half and our supply chain and retail operations, both our own and those of our retail partners, exhibited significant resilience and flexibility. There were more lockdowns due to the Omicron COVID variant, major supply chain challenges, flooding in South Australia, New South Wales and Queensland which resulted in supply route disruptions, and towards the end of the financial year challenges related to Russia’s invasion of Ukraine and lockdowns in China.”

“A strategic investment in inventory, the flexibility of our operations and the outstanding efforts of our people helped our retailers to keep their shelves stocked and continue serving their local communities through these challenges. A testament to our people and independent retailers is that our focus on keeping shelves stocked did not materially hinder the continued successful execution of our MFuture initiatives,” he said.