Operational progress in a challenging environment; focusing on execution
Financial summary
- Total turnover £8.9bn in line with last year (2012/13: £8.9bn)
- Total store sales up 0.8% (2012/13: up 1.3%). Like-for-like store sales down 1.6% (2012/13: down 0.9%)
- Underlying profit(1) down 10% to £401m (2012/13: £445m)
- Underlying earnings per share down 2% to 12.86p (2012/13: 13.09p)
- Profit before tax £344m (2012/13: £440m)
- Interim dividend up 10% to 3.84p (2012/13: 3.49p)
- Net debt of £2,529m (2012/13: £1,680m)
- Gearing of 48% (2012/13: 32%)
Financial strategy
- Financial strategy updated
- Reduced capital expenditure targets announced
- New dividend policy confirmed
- Property estate being reviewed
Strategic highlights
- Convenience - 33 M local convenience stores now trading and performing well: on track to have 100 stores operating this year. New convenience distribution centre secured for the North
- Multi-channel - on schedule with online food proposition to launch in January 2014
- IT systems upgrade programme progressing well - providing the foundation for further cost savings in 2014/15
- Fresh Formats - tailored fresh food proposition now in 169 stores: on track for over 200 stores this year
- Significant productivity improvements in store. Electronic ordering introduced
- Good progress on expanding manufacturing capability
Operating highlights
- Seven new supermarkets opened, including one replacement
- 2,800 own brand products successfully launched
- Strengthened management team in place
- Employer of the Year(2)
Sir Ian Gibson, Non-Executive Chairman, said:
“Consumer confidence and market conditions have remained challenging in the first half. We have continued to invest in and develop our customer offer and this has been reflected by an improved sales performance compared to the second half of last year. Our financial position is strong and we remain focused on maximising returns from our assets and delivering superior shareholder returns. Once again our interim dividend is increased by 10%, in line with our previous commitment.”
“Our strategy for growth in convenience and online is now set. Today we are outlining our financial strategy, which will support our key financial objectives of growing underlying earnings, generating cash and delivering superior total shareholder returns.
This is against an economic backdrop which remains difficult for the consumer, but where our relentless focus on providing great value and quality to our customers, and improving the way we communicate Morrisons unique points of difference, have been reflected in a steady improvement in our like-for-like sales performance.
We have also made significant progress in building our presence in the key growth channels of convenience and online. By the end of the year we will have 100 M local convenience stores, around half of which will be in London and the South East, and we’ve secured a new distribution centre in Bury to support our convenience stores in the North. In parallel we’ve been working at pace on our online offer; the final pillar of our strategy. Morrisons.com will be making home deliveries of our great fresh food by the end of January 2014, supported through our long term service agreement with Ocado.”
Outlook
Whilst early indications of a recovery in the UK economy are encouraging, we are yet to see this impact on consumers’ pockets. We have therefore developed our financial and operational plans on the basis that there will be no significant change to the challenging economic environment in the near future. We anticipate an improvement in our sales performance during the second half and accordingly the Board believes the Group’s performance for the full year will be broadly in line with its previous expectations. Our strategic initiatives are laying the foundations for good progress in the year to January 2015, and beyond.
Notes:
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1 |
Profit before taxation, property disposals, multi-channel and convenience development costs and IAS 19 pension interest |
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2 |
The Grocer Gold Awards 2013 |
Enquiries:
Wm Morrison Supermarkets PLC
Trevor Strain – Group Finance Director 0845 611 5000
Media Relations
Wm Morrison Supermarkets plc: Richard Taylor 0845 611 6912
Julian Bailey 0845 611 5362
Citigate Dewe Rogerson: Simon Rigby 020 7282 284
Management will host an analyst presentation this morning at 09:30. A webcast of this meeting is available at http://www.morrisons.co.uk/Corporate/Investor-centre/
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