This article is from the Australian Property Journal archive
Coles reported a net profit after tax of $594 million for the first half, and said its strong sales growth had continued into the new year, as the major supermarkets get ready to face a Senate inquiry probing allegations of price gouging amid a cost-of-living crisis.
Coles’ share price lifted by nearly 5.5% to a six-month high of $16.75 on the back of the release of its first-half results.
It maintained a fully franked interim dividend of 36c per share.
The net profit result was a 3.6% softening on the prior corresponding period (pcp), while sales revenue lifted 6.8% to $22.216 billion, with growth in supermarkets sales revenue of 4.9% and liquor sales revenue of 1.8%.
Group EBITDA increased 2.8% to $1.847 billion, while implementation costs for automated distribution centre projects and customer fulfilment centre projects tallied $46 million, up from $17 million in the pcp, a figure that is expected to hit $130 million over the course of the full financial year.
Financing costs from continuing operations increased to $213 million on the back of increased interest on lease liabilities associated with new leases and lease renewals.
Coles opened one new supermarket in each of NSW/ACT and Western Australia, while it opened t three and close one in Victoria/Tasmania. It has a total 850 supermarkets and 964 liquor outlets.
Supermarkets sales revenue of $19.8 billion increased by 4.9% with sales revenue growth in the second quarter of 5.1%. Excluding tobacco, sales revenue increased by 6.2%, and at 6.5% in the second quarter. Comparable sales grew by 4.0%, including 3.6% in the second quarter.
During the period, Coles launched its “Great Value, Hands Down” campaign with the prices on more than 500 products dropped, including many essential staples. It said supermarkets sales revenue was up 4.9% in the first eight weeks of the third quarter.
Coles’ supermarket profit margin was 5.1%, shaved down from 5.3% a year ago.
Its result comes a week after major rival Woolworths reported a $781 million loss, as CEO Brad Banducci announced his departure amid the release of embarrassing footage from an ABC interview and heightened public anger over growing supermarket prices.
Banducci and Coles CEO Lead Weckert are expected to front a Senate inquiry in March that will investigate pricing, supplier relations and the effects of a supermarket duopoly.
“Profits are an essential thing for any business, They enable us to continue to operate and for us that means we get to employ 120,000 people,” Weckert said yesterday.
She said Coles makes around $2.60 for every $100 spent by customers, and that margin had now been stable for at least the last five years.
“It has not gone up as we have seen inflation come through.”
