Woolworths records fall in 1H17 operating profit, dividend
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Woolworths' (ASX: WOW) net profit from continuing operations for the first half of fiscal 2017 fell 17 per cent on the same half in the prior year to $785.7 million, after the retail giant continued to invest in the transformation of its food business.
Group net profit for the half year stood at $725.3 million, a sharp turnaround from the $972.7-million loss in the previous corresponding half, which included write-downs related to the company's exit from the Masters home improvement business.
Basic earnings per share from continuing operations stood at 61.3 cents, down 18.0 per cent, Woolworths said in a statement to the ASX.
Sales from continuing operations rose 2.6 per cent year over year to just over $29 billion.
The company declared a half-year dividend of 34 cents, down 22.7 per cent on the prior corresponding half. The dividend will be paid on 7 April 2017 to shareholders on record as at 3 March 2017.
CEO Brad Banducci said Woolworths had made good progress on its key priorities during the half, and he was particularly pleased with the improvement in sales momentum in the Australian Food division, especially in the second quarter.
"This is on the back of strong voice-of-customer scores and is underpinned by continued growth in customer transactions and, more recently, items per basket," he said.
"This momentum gives us confidence that, while we still have a lot to do, we are on the right track."
Banducci said the Endeavour Drinks, New Zealand Food and ALH Hotels divisions also all delivered solid sales growth in the second quarter.
In December 2016, the company agreed to sell its 527 Woolworths-owned fuel convenience sites and 16 committed development sites to BP for $1.785 billion. Consequently, its Petrol business has been classified as a discontinued operation.
However, BIG W reported a loss before interest and tax of $27.2 million in the half, and Banducci said the company is currently reviewing its BIG W strategic plan, which he expects will be completed in the next few months.
Looking forward, Banducci said that with the exception of BIG W, Woolworths expects to see further progress on key priorities in the second half as the company looks to restore sustainable growth.
"However, we still have a long way to go," he said.
"In the second half, we will continue to invest in improving the shopping experience and expect higher depreciation and team incentive payments."
"We continue to be vigilant about the competitive environment for all of our businesses."
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Nicholas Grove is a Morningstar journalist.
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