Key Highlights

• Reporting of the result put underlying NPAT at A$268.8 million against A$275.5 million a year earlier, with underlying EPS of 24.5 cents compared with 25.1 cents.

• Food EBIT rose 5.4%, and the company said the IGA price gap to the major supermarkets narrowed to 2.1%.

• Liquor Revenue rose 1% and Market Share was 32.3%, but EBIT fell 3.8% after a soft first half.

• Group sales rose 1.9% in the first seven weeks of FY27, or 2.4% excluding tobacco, according to one report.

How does a wholesaler that supplies independent supermarkets, liquor stores and hardware retailers keep Earnings steady when each market is under pressure? Metcash Limited (ASX:MTS) reported its FY26 result on 22 June 2026. Group sales were about A$17.3 billion, up 0.2%, underlying net profit after tax was A$268.8 million, down 2.4%, underlying Earnings Per Share were 24.5 cents, and the total Dividend was 18 cents per share. The result shows a Business where Food improved, Liquor and Hardware softened, and cost control did much of the work.

The headline numbers

Reporting of the result put underlying NPAT at A$268.8 million against A$275.5 million a year earlier, with underlying EPS of 24.5 cents compared with 25.1 cents. Operating Cash Flow was A$558 million, up 3.5%, with cash realisation of about 104%, and Leverage was 1.0 times, at the bottom of the target range, as reported by one outlet.

One cited underlying EBIT of A$503.7 million against company guidance of A$501 million to A$505 million, while another reported A$503.7 million as EBIT and A$516.1 million as underlying EBIT.

Food: the improving division

Food is Metcash's largest earner, supplying the IGA network in competition with Coles and Woolworths. Food EBIT rose 5.4%, and the company said the IGA price gap to the major supermarkets narrowed to 2.1%. That is a key indicator, because independent grocers win share when the gap between their shelf prices and the majors is small, helped by wholesale price Investment and the loyalty of local communities.

The risk in this segment is that competition remains intense. Coles and Woolworths continue to invest in prices, and independent retailers rely on Metcash to support that investment through scale purchasing and retailer margins.

Liquor and Hardware

Liquor revenue rose 1% and market share was 32.3%, but EBIT fell 3.8% after a soft first half. The business supplies independent liquor banners such as Cellarbrations and IGA Liquor and competes with larger chains. Discretionary spending, regulatory changes and promotional intensity all influence earnings.

Hardware and Tools EBIT fell 6.3%, hit by weak Demand in Victoria and Tasmania. Total Tools earnings rose 3.7%, and management said its integration is complete. Hardware retail margins remain under pressure. The group said Hardware and Tools carried its second-half momentum into FY27, with high single-digit growth at Total Tools. That is management commentary on early trading and not a forecast of the full year.

FY27 trading and cost programme

Metcash said May was softer but June improved. Group sales rose 1.9% in the first seven weeks of FY27, or 2.4% excluding tobacco, according to one report. Food and Liquor were trading in line with FY26 growth levels. A cost-out programme is expected to deliver about A$25 million in annualised savings in FY27.

Tobacco is worth noting because it inflates revenue without contributing much profit, and its decline can mask underlying growth. One report said revenue excluding tobacco rose 3.8% to A$19.6 billion on a basis that includes charge-through sales, so the two revenue measures should not be mixed.

Dividend and the DRP suspension

Metcash also suspended its Dividend reinvestment plan immediately, in accordance with Rule 18 of the plan rules, so the final dividend payable on 26 August 2026 was paid in cash.

Competitive position

Metcash's strength lies in its distribution network, scale purchasing and relationships with thousands of independent retailers across three categories. Its weakness is concentration in low-growth, margin-sensitive categories and reliance on supermarket competition dynamics. Investors commonly weigh Metcash on EBIT growth, cash conversion, return on Capital and dividend cover, rather than on revenue.

What the cost and mix story implies

Metcash operates on thin wholesale margins, so small changes in Volume or cost move profit noticeably. Growth in Food, which carries the largest earnings weight, remains the swing factor, and Liquor and Hardware will need to stop subtracting for group earnings to grow.

Risks and what to monitor

Key risks include supermarket price competition, weak hardware demand and housing activity, discretionary pressure on liquor, regulatory change, the decline in tobacco volumes, and wage and energy costs. Execution of the A$25 million cost programme and Total Tools growth will determine whether FY27 earnings can grow.

Investors may also look for evidence that the IGA price gap keeps narrowing and that Liquor earnings stabilise, and for further details on capital allocation, including whether the DRP is reinstated. Readers should also compare company commentary with independent data on supermarket pricing and housing activity, because both feed directly into the segments discussed above.