Metcash Wields The Axe

Supermarkets, liquor and hardware group, Metcash will report a big blob of red ink for its 2017-18 financial year later this month after taking an accounting axe to its asset base, lopping $352 million from the value of its supermarkets and convenience store business. The news was released to the markets before trading which saw Metcash shares lose 2.1% to $2.70.

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MTS – UBS rates the stock as Neutral

Is it the start of something special? That’s the question UBS asks after the strategy update. The broker notes Metcash has been forced to reinvest materially in the business, with $40-45m in operating expenditure targeted for FY15. The company has cut the dividend pay-out ratio to 60% and identified $30-40m in working capital benefits over FY15-16.

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