Australian national grocery and liquor wholesaler, Metcash (Au:MTS) has posted a 105 per cent rise in net profit to $166.8 million in the year to April 30. Group turnover was up 18 per cent to A$9.7 billion. The result reflects both a solid underlying performance bythe core operations as well as the gains flowing from the acquisition of the Foodland Associated Ltd (FAL) Australian operations. MTS has emerged as a major force in Australian food wholesaling since being established in 1998 by South African-based Metro Cash & Carry following a takeover of the struggling Davids Ltd. The formula followed the South African approach of one central buying group - using its volume advantage - representing smaller retailers that couldn't compete with the likes of Woolworths. It has been very successful to the point where MTS is now rumoured to be a strong contender for parts of the Coles Group, which will give it vertical integration into supermarkets.
Xero Live
Accounting software provider Xero (XRO) has had a successful debut coming on the market at a 15 per cent premium to the $1 offer price. In May 2007 the company made an offer of $15 million worth of shares at $1 each, which ended up over subscribed. Xero was established in July 2006 by Rod Drury, an experienced technology entrepreneur, and Hamish Edwards. Xero, based in Wellington, provides an online accounting system for small and medium sized enterprises (SMEs). Xero is virtually at the venture capital stage with a promising product but little else. Its future depends on whether it can make any dent on MYOB's dominance with an online product that many conservative accountants may baulk at, although feedback indicates it is a very good product. This is a very speculative investment that will be driven initially by momentum, until real results emerge.
* Views expressed in this article are those of IRG, not the Weekend Herald
