The IGA supermarket supplier says sales revenue for the six months to October 31 rose 1.6 per cent to $6.29 billion, but the bottom line was hit by the $237.4 million non-cash impairment announced last week following 7-Eleven’s decision not to renew.
Metcash chief executive Jeff Adams said the company was unable to reach agreement with 7-Eleven on its supply requirements for the east coast, including delivery routes and scheduling which he said would be uneconomic to the company.
The contract was worth an estimated $800 million in sales annually and is expected to result in a $15 million annualised earnings loss going forward.
Shares in Metcash have dropped by 6.1 per cent since the announcement and were worth $2.77 before trade on Thursday, a more than three-month low.
The company said it remains in discussions with 7-Eleven to continue supply in Western Australia, as well as a number of smaller categories on the east coast.
Hardware sales fell 1.3 per cent but Metcash says it anticipates medium-to-longer term strength in the sector as construction activity recovers from its current lull.
Metcash has reduced its interim payout from 6.5 cents to 6.0 cents but maintained a 100 per cent franking level.
Want to comment?
Send us an email, making it clear which story you’re commenting on and including your full name (required for publication) and phone number (only for verification purposes). Please put “Reader views” in the subject.
We’ll publish the best comments in a regular “Reader Views” post. Your comments can be brief, or we can accept up to 350 words, or thereabouts.
We value local independent journalism. We hope you do too.
InDaily provides valuable, local independent journalism in South Australia. As a news organisation it offers an alternative to The Advertiser, a different voice and a closer look at what is happening in our city and state for free. Any contribution to help fund our work is appreciated. Please click below to become an InDaily supporter.