FY22 result
New CEO has great starting point with momentum building
Need to know
- FY22 result +5% ahead of consensus
- MTS is holding or gaining share in all divisions
- Strong early start to FY23E, upgrades likely
- We retain our Buy recommendation
Investment implications
MTS FY22 EBIT +17.7% to $472.3m was ~7% ahead of consensus forecast.
2H22 food sales were up 4% with very good momentum in 4Q sales +13.8% on pcp. with same-store sales growth of 6.4%. EBIT margins were up 17bp in 2H22.
Liquor independents are winning market share with sales +11% in 2H22 against market growth of 5%.
Hardware division had sales growth of 23% in 2H22 with a small fall in margins due to higher supply chain and labour costs.
Dividend 21.5cps vs consensus of 20cps.
The first 7 weeks of trading are showing good momentum with supermarket sales +4.5%, hardware sales up 20% and liquor up 8.6%. This suggests the improved momentum in 2H vs 1H has continued into FY23.
MTS concerned about inflation outlook and its impact on consumer spending.
New $70m DC in Victoria announced. This backs up our view of higher capex under new CEO.
Figure 1: FY22 result
Source: MTS
This commentary reflects our initial view. For detailed reports for companies under Sandstone Insights coverage, see our latest research notes for our investment view and specific risks associated with investing in these companies.
Stock overview
Share price
Company overview
Metcash is a food and liquor distribution and wholesale business, and a hardware retailing and wholesale business.
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