Ann: Metcash Limited 2014 Full Year Results Presentation, page-2

First time in recent history that MTS has released results/outlook and not dropped heavily, so I'll take that as a victory of sorts!

Standout performances by Mitre 10 and the liquor division, particularly since they are both in areas that are flat in growth and almost as heavily dominated by the Big Two as F&G is.

But the decline in F&G remains worrying. Although it's interesting that Like for Like sales in Convenience are actually unchanged since last year, and total sales down just 0.5%, which means despite all the much talked about competition from Aldi and the Big Two, there hasn't actually been much loss of market share. The problem seems to be more in lower profitability than lower sales.

The diversification out of F&G seems to be going very well. If they can even just stabilise the losses in F&G, the company looks like it could return to growth. The other pillars are now 26% of MTS's EBITA vs 18% last FY, and it wasn't too long ago they were only about 10%.

The company is not actually in any imminent financial danger either, which is something you'd be forgiven for missing in all the negativity surrounding the stock. It's no FGE. Gearing and interest cover are still easily manageable. Dividend payout has finally been dropped to sensible levels (should have happened last year but I guess the board were kind of in denial), but still represents a 6.5% yield which is rare these days.

Looks like another fairly tough year ahead though, with results from the review not flowing through til next FY. I don't think I'll be increasing my holding above its current level of 2.5% of my portfolio.