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THE NEWS WRAP: Metcash blames election, strong rivals for weak grocery results
Grocery wholesaler Metcash has blamed the long federal election campaign for consumer uncertainty and the market power of rivals Coles and Woolworths for a weak result at its grocery division.
The grocery division, which supplies IGA-branded supermarkets, were down 2.3% to $9.1 billion, with the company reporting its net profit was up to $206 million after tax for the year to April off stronger liquor, automotive and hardware revenues.
“There continues to be very strong marketing activity in the food and grocery sector . . . so there's a greater need for extra marketing and advertising expenditure, and I don't think that's going to change,” chief executive Andrew Reitzer said.
“All our businesses face fairly tough trading conditions because the consumer is super-value conscious and continuously shops for bargains and has absolutely no confidence.”
Coles in trouble over supplier contracts
Supermarket giant Coles has come under fire in a Four Corners investigation of the Bangladeshi garment trade, following the Rana Plaza factory collapse in April, which claimed around 1100 lives.
In the reprot, the retail giant is accused of not paying enough to suppliers to obtain stock from a factory with reasonable working conditions.
“Actually, if they want to do the business, they’ll have to go to the non-compliant factories, like you know you have seen the Savar tragedy. So many people died,” Gous Fashion managing director Anwarul Azim said.
Coles’ parent company, Wesfarmers, has signed an accord to improve safety conditions at factories in Bangladesh since the collapse.
AMP issues profit warning
AMP has warned its life insurance payouts will be around $32 million higher than expected for the first five months of the year and its dividend could be cut, as the insurance giant downgraded its half-year profit.
The company told investors it now expects a half-year profit to fall year-on-year from $491 million to between $415 million and $435 million.
The Dow Jones Industrial Average fell 0.94% to 14659.56. The Aussie dollar is up slightly to US92.56 cents.