Supermarkets drive Woolies profit
Woolies says it served on average 20.2 million customers per week. Photo: Glen Hunt
Woolworths’ first half profit has grown to $1.15 billion as earnings from its supermarkets rose by 6 per cent.
The supermarket giant’s net profit in the six months to December 31 was up 19 per cent from $966.9 million in the previous corresponding period.
Earnings from its supermarkets were 6 per cent higher than the previous corresponding period at $1.65 billion, due to further growth in market share and customer numbers, Woolworths said.
The company declared an interim fully-franked dividend of 62 cents, up from 59 cents in the previous corresponding period.
Woolworths shares were up 43 cents, or 1.3 per cent, at $34.44 in early trade.
‘‘The new management is doing a good job,’’ Rhett Kessler, a fund manager at Pengana Capital, said before today’s announcement. ‘‘It’s a well-managed franchise, food inflation’s coming back, and there’s operating leverage in the business.’’
The company has also improved its forecast for its full year performance. It expects net profit after tax from continuing operations to grow by between four and six per cent from the previous financial year.
Woolworths had previously forecast growth of between 3 and 6 per cent.
‘‘Whilst the Australian and New Zealand retail sectors continue to experience some challenging trading conditions, we have seen good progress against our strategic initiatives which have led to strong profitability growth for (the first half),’’ the company said in a statement.
Woolworths’ net profit from continuing operations, which excludes its electronics business Dick Smith, was up 4.2 per cent in the six months to December at $1.25 billion.
Woolworths reported that its pubs and poker machines venture, ALH Group, saw revenues jump more than 19 per cent to $759 million for the half, while earnings before interest and tax (EBIT) increase more than 21 per cent to $141 million.
It said this was driven by pub acquisitions during the period and changes to Victorian gaming regulations.
The latter gives the grocery group a much larger share of profits from poker machines it operates in the state. Woolworths' ALH arm now operates more than one-third of the poker machines in Victoria's pubs - 4677 machines - which is about the maximum allowed under current licensing arrangements.
Woolworths served on average 20.2 million customers per week, it said, and food and liquor sales rose by 4.7 per cent from the previous corresponding period to $20.49 billion.
Big W also posted strong earnings growth, up eight per cent to $129.5 million, as a result of freight and storage cost savings and a changed approach to promotions, Woolworths said.
The company’s home improvement franchise Masters now has 25 stores, and generated sales of $637 million in the six months to December.
AAP with Colin Kruger