Morrisons revenue a resilient £8.7bn, but profit falls

Shares of Bradford-based supermarket giant Morrisons fell about 4% on Thursday after it said revenue slipped 1.1% to £8.73 billion in the half year to August 2 “significantly impacted by very low demand for fuel during and after lockdown, which is now rebuilding.”

Morrisons said profit before tax and exceptionals fell 25.3% to £148 million “after COVID-19 direct net costs of £62m (£155m costs, partly offset by £93m lower business rates).”

Nonetheless, Morrisons said interim ordinary dividend will rise 5.7% to 2.04p — but a decision on a special dividend remains deferred.

“We are confident of continued strong momentum into the second half, improved free cash flow and net debt, and another year of growth in profit before tax and exceptionals,” said Morrisons.

Net debt rose to £2.8 billion from £2.4 at the 2019/20 year end.

In its outlook, Morrisons said: “Despite the unprecedented crisis and many challenges of the first half, our business responded very well and our trading performance was strong. 

“As previously described, COVID-19 has led us to incur many extra direct costs as we help feed the nation.

“In total these extra direct costs were c.£155m during the first half …

“They were part-mitigated by four months of business rates relief of £93m, meaning a net first half COVID-19 cost of £62m which is reported within profit before tax and exceptionals.

“In May we estimated that the costs relating directly to COVID-19 during 2020/21 would be broadly offset by the in-year business rates cost saving.

“This remains our expectation: we anticipate that the £62m first-half net cost will be offset by a similar second-half net benefit, with extra COVID-19 specific costs at around half the level of the first half and a full six months of rates relief of c.£137m …”

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