Metcash surges on increased FY profit

Metcash Ltd has surged after posting increases in both full-year profit and revenue and claiming it will be able to weather difficult economic conditions.

The stock is up 7.6% to $3.70 – its biggest increase in nearly five years – after posting underlying profit after tax increased 6.9% to $280.7 million, above analyst estimates of $276.4 million and up from the previous year's $262.5 million.

Net profit attributable to members was at $206 million for the full year, a 128.9% increase on the $90 million posted in the previous corresponding period.

During the year Metcash raised $368.2 million after transaction costs through a fully underwritten institutional placement of 92.9 million shares and a placement of 16.5 million shares to existing shareholders. 

Revenue in the period increased 3.8% to $13.095 billion, up from 12.6123 billion in the previous corresponding period. 

"It is a challenging time for the independent retail sector with consumer confidence low and the self service supermarket chains locked in a marketing war," chief executive officer Andrew Reitzer said.

"Most particularly, as a wholesaler, we have also had to weather the impacts of continuing price deflation."

Metcash announced a 16.5 cents per share fully franked dividend, in line with the previous year and taking the dividend payable for the full year to 28 cents.

The company said its chief executive Andrew Reitzer will step down on June 30 this year, to be replaced by Ian Morrice.