Strong performance propels Morrisons into third consecutive year of growth

Supermarket group Morrisons is entering its third consecutive year of growth after seeing revenue and profits rise in what its chief executive hailed “a strong year”.

For the 53 weeks to February 2018, the group reported a 2.8% rise in like-for-like sales excluding fuel and VAT, while revenue rose 5.8% to £17.3bn, up from £16.3bn in the prior year period.

Underlying profit before tax came in at £374m, up 11%, while the retailer said reported pre-tax profits stood at £380m, up 16.9% from £325m the year before.

Net debt reduced by £221m to £973m, below its £1bn year-end target. The retailer said it is on track for £700m of annualised wholesale supply sales by the end of 2018.

Morrisons is to pay a special dividend of 4.00p, taking the full year total dividend up 85.8% to 10.09p.

“During the year, the impact of lower sterling on imported food prices was a headwind for the industry but, helped by being a British business with a largely British supply chain, we took this as an opportunity to become more competitive for customers,” Morrisons said.

In February, Morrisons announced it has acquired Noth Yorkshire-based Chippindale Foods, a leading supplier of free range eggs, to enable it to make even more of its own fresh food and become more competitive for customers on important everyday products.

“During the year we simplified our manufacturing business, moving it from profit centre to cost centre. A greater focus on cost, yield and volume, assisted by investment in technology and improved digital capability, has improved productivity and capacity utilisation. We recently bought two new businesses – one potatoes, the other eggs – that allow us to own more of the supply chain.”

The company said it is becoming more competitive by “selling more things our customers want to buy”. It introduced new and improved ranges in areas such as Home & Leisure and ‘Eat Smart’; and said more innovation in its ‘Best’, ‘Free From’, ‘Food to Go’, and ‘Nutmeg’ brands is leading to multi-year growth. In its second Christmas, sales of its premium ‘Best’range grew by 25%.

Chief executive David Potts said: “We had a strong year, becoming more competitive and increasingly differentiating Morrisons for all stakeholders. We are pleased to be paying shareholders a special dividend of 4p a share, which reflects our good performance so far and confidence for the future.

“All parts of our progress so far have one common link: our colleagues. Listening to customers, responding, and improving the shopping trip are as important now as when we started this turnaround three years ago.”

The year saw the group start a rolling programme to supply McColl’s nationwide with both branded products and its own revived Safeway brand, while ‘Morrisons at Amazon’ expanded into more postcodes and cities.

Since year end, the retailer announced a new wholesale supply agreement with SandpiperCl, bringing Morrisons to the Channel Islands.

Chairman Andrew Higginson said: “Morrisons is now entering its third consecutive year of growth, which is a credit to the whole team.

“We will continue to prioritise consistent, meaningful and sustainable growth, which I am confident we are well placed to keep delivering.”