Australian grocery wholesaler Metcash posted an increase in normalised profit for the first half of the year, boosted by strong wholesale sales.

Normalised net profit for the six months ended 31 October increased 12.3% to reach A$109.2m (US$100.7m).

Wholesale sales increased 6.6% to reach A$5.6bn, despite significantly lower inflation in core grocery categories and deflation in many produce categories.

Metcash's major division, IGA Distribution, boosted its comparable-store sales 6.4%. "IGA Distribution continues to be the powerhouse of the Metcash business and is performing well against competition from the two chains," CEO Andrew Reitzer said.

EBITA reached A$189.9m, a 6.9% increase on last year. Operating leverage, however, was somewhat held back in the first half by significantly lower price inflation.

Performance in the company's Campbells Wholesale unit was hampered by large bad debt and soft foodservice and convenience market conditions.

The company raised its interim dividend 10% to 11 cents per share, payable 8 January.