Metcash Reports $9.6 Billion Revenue, EBITDA Up 2% Despite Tobacco Decline

Steady Revenue Amid Structural Challenges

Metcash Limited has reported its FY26 half-year results, demonstrating resilience in a challenging retail environment marked by a significant decline in tobacco sales. Group revenue held steady at $9.6 billion, with a 40.7% drop in tobacco sales since FY21 partially offset by growth across foodservice, convenience, liquor, and hardware segments. Despite this headwind, the company managed to sustain earnings quality and margin expansion.

Underlying EBIT was $240.2 million, a slight decline influenced by one-off integration and strategy costs totaling $8.3 million. Reported profit after tax was $142.2 million, reflecting disciplined cost management and strong operational execution across Metcash’s diversified pillars.

Diversification and Digital Innovation Drive Growth

Metcash’s strategic diversification beyond traditional supermarkets is paying dividends. The Foodservice & Convenience segment, including the Superior Foods acquisition and Campbells & Convenience, showed robust growth, supported by new customer wins and expanded contracts such as the Coffee Club partnership. Liquor sales outperformed the market, gaining share to 32%, while Hardware & Tools benefited from early signs of market recovery and the integration of Total Tools and TTHG merger.

Digital transformation remains a core focus, with the Sorted B2B marketplace expanding to approximately $4 billion in annual sales, expected to reach $6 billion in early 2026. This platform now processes about 30% of Metcash Group sales, enhancing supplier and customer connectivity. Additionally, the rollout of the LocalEyes retail media network is advancing, with 470 digital screens installed and over 260 advertising campaigns completed, positioning Metcash at the forefront of retail media innovation for independents.

Operational Excellence and Financial Strength

Metcash’s balance sheet remains robust, with a debt leverage ratio near 1.0x, comfortably within the company’s target range. Operating cash flow surged 60% to $262 million, underpinning a strong cash realisation ratio of approximately 106%. The company declared an interim dividend of 8.5 cents per share, reflecting confidence in ongoing cash generation and capital management discipline.

Key operational initiatives include the completion of the core build of Program Horizon, Metcash’s new ERP system, with deployment scheduled for completion by the end of 2026. This upgrade aims to reduce complexity and improve automation, leveraging Microsoft’s cloud and AI capabilities to support future growth.

Outlook, Momentum Continues Despite Market Pressures

Looking ahead, Metcash anticipates continued growth momentum excluding tobacco, with early indications of sales acceleration in supermarkets and Total Tools. The company remains focused on executing its ‘Best Store in Town’ strategy, expanding addressable markets, and capitalising on retail media and digital marketplace opportunities. While competition intensifies and cost pressures persist, Metcash’s diversified portfolio and strategic investments position it well to capture market recovery and margin expansion.