Australia’s Woolworths’ first-half profit jumps, inflation pressures loom

TOP Australian grocer Woolworths Group joined smaller rival Coles Group to warn rising wages and energy bills were pushing up costs, even as it posted a 25 per cent rise in first-half profit on the back of an increase in sales.

“Cost growth in second-half will also benefit from the non-recurrence of Covid-19 costs ... however, cost inflation in areas like wages, energy and supply chain remains material and well above recent history,” Woolworths said.

Coles on Tuesday reported a better-than-expected first-half profit on reduced pandemic-related spending but warned about rising costs.

Woolworths expects solid sales momentum continuing in the second-half till date, but estimates operating earnings growth to be lower sequentially.

For the six months ending Jan 1, Woolworths benefited from a 2.5 per cent sales growth at its top earning unit Australian Food as consumers returned to shopping in store, with a further boost from non-recurrence of direct Covid-19 costs of A$239 million incurred last year.

The grocer’s profit attributable to continuing operations, excluding one-off costs, in the first half was A$845 million (S$777 million), compared with A$676 million a year earlier.

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That compares with a Macquarie estimate of A$842 million.

Demand for groceries and essential items remained robust as rising prices and subsequent cost-of-living pressures forced shoppers to pull back on discretionary spending.

The Sydney-based grocer declared an interim dividend of 46 Australian cents per share, compared with 39 Australian cents per share a year earlier. REUTERS