Business Description:
Metcash Limited (MTS) is a wholesale distribution and marketing company specialising in grocery, fresh produce, liquor, hardware and other fast moving consumer goods. MTS has four business units: IGA Distribution, Campbells Wholesale, Australian Liquor Marketers and Mitre 10. MTS conducts its business mainly in Australia.

Strategy Analysis:
Food distribution is the main growth driver, realising solid growth and margin improvement through scale efficiencies. The lack of real competition from Coles has allowed larger format Woolworths to capture significant market share for superior earnings and margins while IGA independent stores, backed by MTS, find favour across smaller catchment areas. MTS will use its balance sheet to fund inventory expansion by easing credit terms for larger stores. The aim is to encourage independent operators to invest more free capital into stores. Improved fit out and customer service boost the shopping experience. Metcash reported NPAT down 14.3% to $94.4m for the half-year ended 31 October 2011. Revenues from ordinary activities were $6.09bn, up 1.7% from the same period last year. Net operating cash flow was $252.4m compared to $20.2m last year. The interim dividend declared was 11.5 cents compared with 11.0 cents last year. Looking ahead, management remains focused on growing the group's businesses and implementing initiatives to reduce costs. The board upgraded guidance for the full year of low to mid single digit growth in underlying earnings per share.