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Australia's Woolworths cuts its way back to profit

[SYDNEY] Woolworths Ltd, Australia's biggest grocery chain by sales, said on Wednesday it swung to an annual net profit from its first ever loss the previous year, helped by cost-cutting at its core supermarket business.

Net profit was A$1.53 billion (S$1.61 billion) for the year to June 25, recovering from a net loss of A$1.2 billion the previous year mostly caused by a one-off charge to exit a failed foray into hardware, the company said.

Excluding one-offs, underlying net profit from continuing operations fell 3.6 per cent to A$1.42 billion due to the cost of restructuring budget department store chain Big W.

Woolworths declared a final dividend of 50 Australian cents per share, up from 33 Australian cents per share a year ago.

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Under chief executive officer Brad Banducci, Woolworths has sought to quit non-core units like hardware stores and service stations to refocus on groceries amid a price war with main rival Coles and new discount players like Germany's Aldi Inc.

"FY17 was a year of rebuilding the foundations of our business and we are pleased with our progress over the last 12 months, particularly in the second half," Mr Banducci said.

Woolworths said in December that it would sell a chain of petrol stations to London-based BP plc for A$1.8 billion, although the Australian antitrust regulator has since said the deal may hurt competition. It gives its final decision later this month.

Comparable store food sales at Woolworths rose 3.6 per cent for the year, beating Coles owner Wesfarmers Ltd's food and liquor sales growth of 1 per cent.

Wesfarmers, which has also been trying to cut non-core businesses, posted a record profit earlier this month as a coal mine portfolio which it has been trying to sell benefited from a spike in commodity prices.