Supermarket giant Morrison boasted that it had 'delivered in a challenging year' as it beat both sales and profit expectations in 2011, after seeing a record number of customers in its stores.
Turnover excluding VAT rose 7% from £16,749m to £17,663m in the 12 months ended January 29th, ahead of expectations of £17,570bn, helped by an 18% jump in fuel sales. Store sales alone, which exclude fuel, increased by 3.9% to £13,436bn, with new stores - of which there were 34 - contributing 2.1% of this growth.
Overall, like-for-like sales (ex-fuel, ex-VAT) increase by 1.8%. Meanwhile, customers numbers were up by 1.3%, or 400,000 per week.
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Sales growth was seen to be strongest in London and the south east, but Morrison assured that it was still pleased with its performance everywhere else.
Pre-tax profit jumped 8% from £874m to £947m, ahead of expectations of £922m, while 26.7p in basic earnings per share (EPS), up 11% on the year, beat the 25.19p estimate. Underlying basic EPS also rose 11% to 25.6p.
The operating margin was flat at 5.5%, however, the underlying result, which is adjusted for the impact of fuel sales mix, showed an improvement of 20 basis points.
"This has been Morrisons best year yet with another good financial performance and growth ahead of the market," said Chief Executive Officer Dalton Philips.
The retailer maintained its policy of increasing its dividend in line with underlying earnings growth ("subject to a minimum increase of 10% in each of the three years to 2013/14") and has recommended a total dividend of 10.7p per share, up 11%. The dividend is covered 2.4 times by underlying earnings.
Operating cash flow was 11% higher at £1,264m, despite capital expenditure and investments increasing by a half (£306m) to £901m due to the planned acceleration in its store-opening programme and a new regional distribution centre. As a result, net debt surged to £1,471m, from £817m the year before, but the firm assured that this remains low for the sector.
The group said it is still on track to meet its objective of returning £1bn to shareholder over the two year to March 2013, in addition to normal dividends.
"We know that 2012 will be tough, and we will be working hard to deliver even better value for our customers. At the same time, we have ambitious plans for the long term development of the business, through new supermarkets, convenience stores and the development of our multi-channel capabilities.I am confident that Morrisons will make further progress this year," Philips said.
BC
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