Morrisons' interim results

Morrisons results reveal supermarket price war wounds

By Michael Stones contact

- Last updated on GMT

Morrisons reported half year profits down by more than 30%
Morrisons reported half year profits down by more than 30%

Related tags: Supermarket

Morrisons has revealed half-year profits down by more than 30%, as the retailer battled sharper competition from discount stores.

Pre-tax profits for the six months to August 3 slumped to £239M compared with £344M during the same period of last year. Total turnover fell by 4.9% to £8.5bn, while like-for-like sales – excluding fuel and VAT – fell by 7.4% compared with 1.6% in 2013/2014.

But despite the results Morrisons’ confirmed the decision, made in March, to raise the interim dividend by 5% to 4.03p, and to pay a total dividend of not less than 13.65p for 2014/15.

‘Unprecedented change’

The retailer’s non-executive chairman Ian Gibson acknowledged that the industry was experiencing “unprecedented change”​ and that conditions remained tough.

“Our first-half results reflect the reset of the business we announced in March,”​ said Gibson. “Morrisons is now well underway with building the foundations for a better future. The board is confident of the new strategy and Morrisons financial position remains strong.”

Morrisons chief executive Dalton Philips said he was encouraged by the progress made six months into its three-year recovery plan. “There is an enormous amount of change and modernisation flowing through our core business, much of it enabled by new systems,”​ said Philips.

Online and convenience

Key achievements of the period were price investment, in-store improvements, and better products, he said. “Our new growth channels – online and convenience – are progressing well, and our cost-savings and cash flow plans are both on track to achieve our ambitious three-year targets.” ​The Morrisons card was expected to be launched soon.

In June the retailer revealed plans to axe 2,600 jobs​ in a management restructure, in order to help finance its £1bn investment programme. Key parts of the recovery plan were the development of the supermarket’s online offer and boosting convenience sales with the opening of 200 discount stores. 

While it was too early to see sales benefits, Morrisons was “getting back on the front foot”, ​as it implemented change and innovation throughout the business. Sales will start to improve towards the end of the second half, it was predicted.

The retailer expected to generate £2bn of cash and £1bn of cost savings during the next three years.

Meanwhile, full-year profit expectations remained on course to reach £325M–£375M before tax in 2014/15, after £65M of new business development costs and £70M of one-off costs.

Morrisons was on track to become “a more distinctive value retailer for the next generation of grocery retail”, ​Philips concluded.

Britain’s fourth biggest supermarket has found its sales and profits squeezed this year by the increasing polarisation of the grocery market. Discounters, Aldi and Lidl, and posh food retailers, Waitrose and Marks & Spencer, have both boosted their share of the market, at the expense of Morrisons and its big three rivals: Tesco, Sainsbury and Asda. 

 

Morrisons’ results – at a glance

• Total turnover down by 4.9% to £8.5bn

• Like-for-like sales (ex-fuel/ex-VAT) down by 7.4%

• Underlying profit before tax down 51% to £181M

• Underlying earnings per share down 52% to 5.74p

• Profit before tax £239M

• Net debt reduced by £209M to £2,608M

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1 comment

Morrisons

Posted by Pearl Thorburn,

I love shopping at Morrisons, such a good choice of food and excellent value. Bye the way - the 'O'Kane' Chicken Kievs are delicious and excellent value at £1.00 per pack. The negative press earlier this year regarding the product was definitely not deserved !

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