13th Mar 2014 08:42
LONDON (Alliance News) - Shares in Wm Morrison Supermarket PLC dropped at the open Thursday morning after reporting a 13% decline in underlying profits in its recent financial year and a swing to a pretax loss on big exceptional charges.
The UK's fourth-largest supermarket chain warned that it expects to make underlying profits for the current financial year well down from what it made last year.
But Morrisons also announced some GBP1 billion in property disposals, including its Kiddicare business and its stake in US online retailer Fresh Direct, and GBP600 million of working capital savings over the next three years, and said it will invest GBP300 million this year in customer propositions, including price cuts. It raised its total dividend for the recent year by 10%.
Morrisons reported an underlying pretax profit of GBP785 million for the financial year ended February 2, a 13% drop when compared with GBP901 million a year earlier. The supermarket chain said it swung to a pretax loss of GBP176 million for the year, compared with a pretax profit of GBP879 million the prior year.
Revenues for the year were down 2% to GBP17.7 billion, from GBP18.1 billion the prior year, and reported a steeper decline in like-for-like sales excluding fuel and VAT, of 2.8%, compared with 2.1% a year earlier.
Morrisons warned that, as the challenging consumer and market environment continues, for the current financial year it is expecting to earn little better than half of what it recorded in the financial year just ended.
"At this early stage in the year, we anticipate that underlying profits in 2014/15 will be in the range of GBP325 million to GBP375 million, after charging GBP65 million of new business development costs and GBP70 million of one-off, non-recurring costs," the company said in a statement.
Including all those charges, Morrisons said it is expecting an underlying profit of between GBP460 million and GBP510 million for the current financial year, in comparison to the GBP785 million in underlying profits for the year ended February 2.
During the year, the supermarket booked a total of GBP903 million in exceptional costs, including a GBP163 million writedown on its Kiddicare business, a GBP319 million impairment of sites it no longer wants to build on, and GBP379 million in respect to trading stores.
Morrisons said it is now looking to sell the Kiddicare baby-product and toy business after a disappointing trading performance, and to cut its cost base.
Despite its reversals, Morrisons maintained its progressive dividend policy, increasing its total dividend for the year by 10% to 13.0 pence.
Morrisons shares were trading 7.8% lower Thursday morning at 214.90 pence per share, leading the fallers in the FTSE 100.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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