Coles swings to profit growth thanks to coronavirus panic buying
Supermarket giant Coles has swung its business back into profit growth for the first time in four years after a booming year for the business thanks to coronavirus-fuelled panic buying.
At its full-year results released this morning, Coles' earnings before interest and tax (EBIT), excluding a range of significant items, increased 4.7 per cent to $1.76 billion, a vast improvement on last year's 8.3 per cent decline for the same metric.
Coles has swung to profit growth for the first time in four years.Credit:Martin Keep
Full-year sales for the company rose 6.9 per cent from the year prior to $37.4 billion, with sales at Coles' all-important supermarket sector up 6.8 per cent to $33 billion for the full year. Comparable sales for supermarkets grew 5.9 per cent.
Coles, along with rival supermarket Woolworths, has been one of the best-performing businesses during the coronavirus pandemic, with virus-fuelled panic buying of food driving the retailer to its highest quarterly sales figure in its history earlier this year.
Coles' prior financial year is not directly comparable due to it containing five months of contributions from the Kmart, Target and Officeworks business when the supermarket was still owned by retail conglomerate Wesfarmers. It was demerged in late 2018.
The company also sold or restructured its hotels and fuel businesses throughout 2019, which are no longer relevant to the 2020 financial year. To reflect the true nature of its ongoing operations, Coles' included its 'retail results' which excludes all non-core one-offs.
On this basis, net profit after tax for the full-year grew 7.1 per cent to $935 million. On a statutory level, which includes the various former operations, Coles' profit after tax declined 31.8 per cent.
Chief executive Steven Cain said the last year was the "greatest test of our lifetime" as the company was rocked by bushfires, floods and a global pandemic.
"There has, and will be, much to learn from COVID-19. We are determined to emerge as a better, stronger business and team. Our purpose of sustainably feeding all Australians to help them lead healthier, happier lives is now more relevant than ever," he said.
"The pace of change in the business is accelerating, particularly with our digital assets and capabilities, and we are demonstrating true agility on a week to week basis."
Coles' results came in ahead of market consensus, which had expected revenue of $37.1 billion and EBIT from continuing operations of $1.56 billion.
The retailer declared a total dividend for the year of 57.5 cents per share, an increase of more than 60 per cent from last year, payable on September 29.
More to come