Incoming Metcash chief executive Ian Morrice has lashed out at his rivals Coles and Woolworths, saying Australia’s supermarket business is not a level playing field.
Mr Morrice made the statement as Metcash, the wholesaler behind the IGA and Franklins supermarket chains, announced a 6.9 per cent rise in its underlying full year profit to $281 million.
Metcash lost market share in its core grocery business during the year as it completed a major restructure that included store closures.
But shares in the wholesaler jumped 17 cents, or 4.9 per cent, to $3.61, with an analyst saying the result was better than expected.
Mr Morrice said grocery price “deflation” was likely to continue, blaming in part Coles’ and Woolworths’ increasing use of private label goods, their domination in the fuel market and use of discount shopping dockets.
“The playing field certainly is not level in grocery in this country at the moment,” Mr Morrice told reporters.
“We’ll be looking for help from the people who’ve got the power to level the playing field for us in that regard because, unlike our competitors in grocery, we don’t control the petrol stations and the price of petrol.”
The competition watchdog is conducting an inquiry into the impact of shopping docket fuel discounts.
Andrew Reitzer, who Mr Morrice is replacing as CEO on June 30, said Metcash wanted the Australian Competition and Consumer Commission to ensure “that someone that has a dominant share of one market can’t use that power in another market”.
Metcash recorded revenue of $13.1 billion for the year to April 30 and made a net profit of $206 million.
Net profit was up $129 million on the previous year, when the company recorded restructure costs and impairments.
The wholesaler suffered a 2.3 per cent fall in sales in its core food and grocery business to $9.1 billion as it closed stores, but achieved 35 per cent earnings growth to $47 million in its liquor business.
Metcash’s share price recovered from being oversold previously after the results came in above analyst expectations, Commonwealth Bank analyst Andrew McLennan said.
But market share remains an issue for Metcash, he said.
“The longer term trend has been one of a difficult competitive position that’s likely to continue,” he said.
Mr Reitzer said consumers were “not in a happy space” at present.
“They’ve had three, four interest rate cuts, unemployment (is) more or less the same and they just won’t spend money,” he said.
Everything’s got to be at a bargain, everything’s got to be on promotion and many products now we don’t sell unless it’s on promotion.”
