Metcash upgrades profit guidance following strong second half performance

Metcash Ltd has upgraded its underlying net profit after tax forecast for the 2026 financial year, citing a robust performance across its core divisions and disciplined cost management. The announcement, released following the conclusion of the financial year on April 30, 2026, triggered a significant rally on the ASX, with the company's share price surging by more than 10% to reach $3.02 on Monday, 11 May 2026. This positive earnings update exceeded previous market expectations, reflecting a period of operational resilience for the major Australian wholesale distributor.

The organisation now forecasts an underlying net profit after tax (NPAT) of between $268 million and $270 million for the 2026 financial year. This improved outlook is largely attributed to a stronger performance in the second half of the year across the Food, Liquor, and Hardware & Tools segments. Group revenue for the full year is expected to grow by 0.7% on a reported basis, though this figure rises to 3.8% when excluding tobacco sales, which have historically impacted top-line growth figures. The group's earnings before interest and tax (EBIT) for the 2026 financial year is forecast to land between $501 million and $505 million.

Divisional Performance and Revenue Streams

The diversified nature of the Metcash portfolio provided a foundation for the upgraded guidance, with each major division contributing to the positive momentum. The Food division remains the largest contributor to the group, with revenue reaching approximately $10.5 billion. This segment has demonstrated significant resilience in a competitive retail environment, supported by the extensive network of independent retailers under the IGA banner. The Liquor division also performed strongly, recording revenue of approximately $5.4 billion.

In the Hardware & Tools division, which includes brands such as Mitre 10 and Total Tools, sales momentum improved throughout the latter half of the financial year. Revenue for this segment reached approximately $3.7 billion, with a forecast EBIT of between $175 million and $179 million. Metcash Group CEO Doug Jones noted that the resilience of the Food and Liquor businesses, combined with the improved sales trajectory in Hardware & Tools, served as the primary drivers for the upgraded profit expectations.

Despite the broader economic pressures facing the Australian retail sector, the company has maintained its earnings growth trajectory. Metcash has achieved an earnings growth of 10% over the past year, significantly outperforming its five-year average earnings growth of 4.2% per year. This performance suggests that the independent retail sector, which Metcash supplies, continues to hold a stable position in essential consumer spending categories.

Cost Management and Capital Expenditure

A critical component of the improved financial outlook is the company's focus on cost discipline and capital efficiency. Metcash reported that its capital expenditure for the 2026 financial year was approximately $170 million, which is roughly $30 million below its previous guidance. This reduction in spending was achieved through disciplined project management and a strategic approach to infrastructure investment.

Looking ahead, the organisation has identified new structural cost initiatives designed to further enhance profitability. These programmes are projected to deliver at least in annualised savings starting in the financial year. These initiatives are part of a broader strategy to offset inflationary pressures and maintain margins in a high-cost environment.