Australian supermarket group Woolworths Limited (Woolworths) announced Net Profit After Tax of $2.26 billion — up 24.4 per cent on the previous year, or an increase of 8 per cent from continuing operations and before significant items — at its annual general meeting (AGM), held 26 November 2013.
The Board announced a 5.6 per cent increase in the dividends per share to 133 cents for the 2013 financial year, up from 126 cents in the previous year. Earnings per share increased to 182.6 cents, up 22.8 per cent or 6.7 per cent from continuing operations and before significant items.
In total, $2.2 billion was returned to shareholders in 2013, including $500 million from the divestment of the SCA Property Group.
“The result reflects the underlying strength and resilience of each of the businesses and an ability to deliver solid results against a backdrop of broader economic and market uncertainty that prevailed throughout the year,” said Ralph Waters, Chairman Woolworths.
“It is particularly pleasing that all established divisions returned a positive earnings result and that good progress has been made on initiatives to deliver sustainable and profitable growth into the future,” Mr Waters said.
Sustainable profit growth with “solid foundations” laid for the future
During last year, Woolworths said its Australian Food and Liquor businesses continued to increase market share, customer numbers and basket size with strong volume growth a key highlight.
“Woolworths has also undertaken some key acquisitions this year that will further enhance our capabilities, improve the offer to customers and increase value to shareholders,” Mr Waters said.
Woolworths acquired a 50 per cent stake in Quantium, a leading Australian data-driven strategy and insights business. It also acquired New Zealand-based Ezibuy, a leading retailer of apparel and homewares in Australia and New Zealand. The Woolworths Home Improvement business Masters continued its rollout with 31 stores trading at the end of the financial year. There are now 36 Masters stores.
Progress against strategic priorities
Woolworths said its results came from the work that is being undertaken to meet the objectives it outlined in its Strategic Priorities. Its Stategic Priorities are:
1. Extending leadership in Food and Liquor
2. Acting on its portfolio to maximise shareholder value
3. Maintaining its track record of building new growth business
4. Putting in place the enablers for a new era of growth
Woolworths said it had increased momentum in its Food and Liquor business, with higher comparable sales and EBIT growth, strong volume and trading area growth, and increased market share.
“Our continued value leadership has reinforced our position as Australia’s lowest priced full range supermarket,” said Grant O’Brien, Woolworths CEO. “Our customers are saving with ‘More Savings Every Day’ and ‘Extra Special’ offers for Everyday Rewards customers,” he said.
“As ‘Australia’s Fresh Food People’, we drove Fresh market share growth through innovation, in store improvements, and a great range,” Mr O’Brien said.
Woolworths said the consolidation of its entire Liquor convenience under the BWS banner had enable it to “reinvigorate the brand” and that customers had responded well. The Company said it had continued its expansion of the Dan Murphey’s brand, and continued to grow its direct and online channels via danmurpheys.com.au, Langton’s and Cellarmasters.
2013 result highlights
• Net Profit After Tax of $2.26 billion was up 24.4 per cent on the previous year
• Net Profit After Tax from continuing operations before significant items of $2.35 billion, was up 8 per cent
• Every division grew its earnings:
• Australian Food and Liquor was up 8.7 per cent
• New Zealand Supermarkets up by 5.3 per cent
• BIG W was up 7.2 per cent
• Hotels up 34.7 per cent
• The return to shareholders were fully franked Dividends of 133 Cents Per Share, up 5.6 per cent on the previous year
• In 2013, Woolworths said it served an average of 28.4 million customers per week, an increase of 3.6 per cent on the previous year.
“Looking forward to the 2014 financial year, I can report that the momentum generated last year hascontinued into the first quarter, and we recorded sales growth from continuing operation of 6.1 per cent,” Mr O’Brien said.
Woolworths said it recognised that “healthy food choices are also important to our customers”.
“We have recently announced a partnership with renowned chef, Jamie Oliver, to inspire our customers to cook and eat more fresh food,” Mr O’Brien said. “We also know our customers want us to source Australian made and grown product where we can, as well as products from their local area,” he said.
In 2013 Woolworths has undertaken several initiatives to stock more Australian products. Australian Food News reported in August 2013 that Woolworths had signed a $7 million deal with Australian food manufacturer SPC Ardmona to supply fruit for the supermarket’s Own Brand. The supermarket also signed a deal to source 100 per cent of its Select frozen vegetables range from vegetable processor Simplot Australia.
“Our customers also want to see products made in their local area in our stores,” Mr O’Brien said. “To that end we have appointed local sourcing managers to work with local producers,” he said.
Australian Food News reported in October 2013 that Woolworths was also trialling a direct relationship with dairy farmers. ‘Farmers’ Own’ milk, sourced directly from dairy farmers in the Manning Valley, has commenced its roll out across New South Wales stores.
Woolworths CFO succession
Woolworths also announced at the AGM the retirement of its current Chief Financial Officer (CFO) Tom Pockett. Mr Pockett, who has held the role of CFO for 11 years, and as Director for 7 years, will retire as CFO on 1 February 2014 and retire from the Board on 1 July 2014.
Mr Pockett will be succeeded by David Marr, who is currently the General Manager of Corporate Finance. Mr Marr joined Woolworths in 2011 as General Manager of Finance in the Australian Supermarkets division.
