Woolworths Limited (WOW) reported a net profit to $1.835 billion for the year ended 28 June, up a 12.8% from the prior year. The diversified retailer sold almost $1 billion worth of goods a week as solid growth was recorded across all key financial measures.
Looking ahead the group said it was expecting the strong sales growth to taper off in the current year without the positive effects of the government stimulus package and the influence of macro-economic factors such as the anticipated increase in interest rates in calendar 2010.
Mindful of this Woolworths said it expected group sales to grow in the upper single digits, while EBIT would grow faster than sales.
Net profit next year would grow in the range of between 8% to 11% Woolworths said.
Woolworths added, however, that the recently released hardware strategy had not been factored into forecast figures.
For the year to 28 June 2009, many of the key economic measures increased between 10% and 15%, including an 11.5% increase in EBITDA, an 11.7% increase in earnings per share and a 13% increase in the annual dividend to $1.04 per share.
Woolworths said the strong sales growth was recorded as the retailer reinvents its brands and refurbishes it stores. Currrently around 40% of Australian supermarkets have had a new format rolled out.
The group said the core the company’s future growth strategy was underpinned by refurbishment of its stores.
”Our long term cost advantages obtained under Project Refresh will be maintained and increased,” the company said.
Despite the core supermarket dominance of Woolworths, which with Coles has around an 80% market share, the retailer said it had room to grow across all its businesses.
Some of key drivers to successful expansion included through bolt-on acquisitions such as Macro Wholefoods and sourcing the goods from overseas, and investing in and leveraging supply chain expertise.
Furthermore, over the course of the year Woolworths opened 28 new supermarkets in Australia, with 21 new petrol stations.
Commenting on the result for the year chairman James Strong said the result was a good one in a difficult economic environment.
“Woolworths has a clear strategy well executed by an experienced team, which has underpinned this year’s result. The year has seen significant global economic challenges that will continue in the near term,” Mr Strong said.
”Woolworths is well positioned going forward and will continue to invest to develop both core and new business opportunities.”
Looking across the company’s divisions the Australian supermarket division was a standout performer, with EBIT climbing 17%.
BIG W EBIT also surged 25.9% as retailers turned to cheaper alternatives in difficult economic times.
The consumer electronics division fell 18% in total.
Meanwhile, Woolworths last year sold $5.2 billion worth of alcohol, almost the same as the total petrol sales at $5.5 billion.
Commenting on the dividend payout Mr Strong said the 13.0% increase in dividend per share to 104c from 92c in FY08 reflected the confidence that the Board has in the company’s operations, results and the continued focus to provide improved shareholder returns.
At the close of business Wednesday, Woolworths shares were up 7c to $28.70.
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