Woolworths NZ profit up 29% on increased sales at fatter margins

Woolworths New Zealand, which accounts for about 40 percent of the country's supermarket sales, boosted its annual profit 29 percent as it squeezed more out of increasing revenue.

Net profit rose to $128.9 million in the 12 months ended June 24, from $99.8 million a year earlier, financial statements lodged with the Companies Office show. Revenue grew 3.5 percent to $5.57 billion, a faster pace than the 2.4 percent increase in cost of sales to $4.28 billion.

Woolworths' revenue gains came in a period when local consumer price inflation shrank 0.2 percent for grocery foods in the June quarter from a year earlier, and subsequently widened to a 2.4 percent contraction in the three months ended September 30, according to government figures.

Including an unrealised $28.1 million write down in the fair value of its 10 percent stake in budget retailer Warehouse Group, total comprehensive income was $100.9 million. Since the balance date, Warehouse shares have rallied 20 percent, recently trading at $3.01.

Woolworths finished rebranding its local stores to Countdown in 2012, opening seven new stores during the year and reopening its quake-damaged Christchurch supermarket. The company received $3.4 million from earthquake-related insurance recoveries in the year.

The supermarket chain is looking at setting up pharmacies within its stores, with planned trials at two new Countdowns in Wellington and Palmerston North, and is also looking at expanding its health and beauty product range across its network.

Woolworths increased its spending on employees to $546.6 million in the year from $519.2 million a year earlier. That includes salaries and wages, some $5.4 million in KiwiSaver contributions, termination benefits, fringe benefits and leave entitlements.

Since the balance date, Australian parent Woolworths spun out a new retail investment trust, Shopping Centres Australasia Property Group, which will own a portfolio of shopping centres and supermarkets currently owned by the group.

As part of the deal, some $218 million of property held by the New Zealand unit will be sold and leased back, the statements say.

Shares in Woolworths slipped 0.1 percent to $A29.51 in trading on the ASX yesterday, while SCA Property gained 1 percent to $A1.52.

(BusinessDesk)