Morrisons registers 37.1% decline in its first-half profit

September 10, 2021 (Last Updated September 10th, 2021 11:29)

The retailer expects its whole-year profit before tax and exceptional items to exceed last year's figure of $595m.

Morrisons registers 37.1% decline in its first-half profit
Morrisons’ revenue rose by 3.7% to $12.5bn during the first half of the year. Credit: Elliott Brown / Flickr.

British supermarket chain Morrisons has reported its interim results for the six months to 1 August, with a 37.1% drop in profits before tax and exceptional items to £105m ($145m).

The company said that this figure had been impacted by £41m ($56m) of direct Covid-19 related costs, including £80m ($110m) lost from cafés, fuel and food-to-go.

During the six-month period, the retailer saw its total revenue, including fuel, rise by 3.7% to £9.05bn ($12.5bn) from £8.73bn ($12bn) a year earlier.

The retailer’s online like-for-like sales growth, which includes its Amazon partnership, increased by 48%, while its overall like-for-like sales growth, excluding fuel, dropped slightly by 0.3%.

Morrisons chairman Andrew Higginson said: “Across the business, the whole Morrisons team has shown commendable resilience facing into a variety of continuing challenges during the first half, including the ongoing pandemic, disruption at some of our partner suppliers and the impact on our supply chain of heavy goods vehicle (HGV) driver shortages.

“As we approach our busiest time of year, I’m confident the team will continue to rise to all challenges and keep up all the good work to improve the shopping trip for customers.”

The retailer expects a strong free cash flow and an additional reduction in its net debt during the second half of the year.

It has forecast its net debt, or earnings before interest, tax, depreciation and amortisation (EBITDA), to be no higher than the 2019-20 level of 2.4x.

For the full year, Morrisons expects its profits before tax and exceptional items, including business rates paid, to exceed last year’s figure of £431m ($595m).

Last month, the retailer accepted a £7bn ($9.54bn) takeover bid from private equity firm Clayton, Dubilier and Rice (CD&R).

The retailer was advised to accept CD&R’s offer by its Board of Directors, having previously received separate offers from CD&R and Fortress Investment Group.