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Morrison Supermarkets total turnover decreased 4.1%

Staff writer ▼ | March 10, 2016
Morrison Supermarkets announced preliminary results for the year to January 31, 2016. Total turnover was £16.1bn, down 4.1% year-on-year.
Morrison Supermarkets
Morrison Supermarkets   Store turnover of £12.8bn was down by 1.4%
Store turnover of £12.8bn, excluding fuel, was down by 1.4%, comprising LFL down 2.0% (including a positive contribution of 1.0% from online) and 0.6% from new space.

Fuel sales fell by 12.6% to £3.1bn, with deflation a key feature. Towards the end of the year we led the market lower on fuel prices, and volumes responded. In Q4, despite deflation of nearly 20%, fuel LFL was almost flat.

Sales improved through the year. In the second half ex-fuel LFL was down 1.3%, an improvement on the first half (down 2.7%). For Q4, LFL was up 0.1%, despite deflation of over 3%, and LFL Number of Transactions was up 1.6%.

Morrison Supermarkets underlying operating profit was £339m, with operating margin down 53bps year-on-year to 2.1%. This excludes impairment and provision for onerous contracts, property disposal profits, loss on disposal of 140 M local stores, and the one-off set-up cost of the defined contribution pension scheme - see Figure 1 for details.

Further adjusting for store closure and restructuring costs of £60m as previously guided, underlying operating profit was down 22% to £399m (2014/15: £510m) and operating margin down 56bps year-on-year to 2.5%. Net finance costs were £99m (2014/15: £98m).

Reported PBT was £217m, and UPBT(1) was £242m. Adjusting for the £60m store closure and restructuring costs, UPBT was down 27% to £302m (2014/15: £413m), in the middle of our guidance range of £295m-£310m - see Figure 1 for details.

New business development (NBD) costs for online and convenience were £47m (2014/15: £71m). These are included in all measures of operating profit and PBT. Underlying basic EPS was reduced to 7.8p (2014/15: 10.9p).

Capital expenditure fell to £365m, from £520m for 2014/15. This was lower than guidance of c.£400m due to timing effects, with some projects moving into 2016/17.

Morrison Supermarkets free cash flow pre-dividend was £854m, which included a further £348m improvement in operating working capital and £300m of property disposal proceeds.

Overall, post-dividend and pre-disposal proceeds, the business was again cash flow positive, generating £257m during the year. Group net debt fell to £1,746m, down £594m from the end of 2014/15. The proposed final dividend is 3.50p, bringing the full year to 5.00p.

The company closed twenty one supermarkets and opened one, with supermarket net space falling by 206,000 square feet. In addition, its recently announced the proposed closure of another seven stores, 111,000 square feet. Return on Capital Employed (ROCE) was 5.3%.