Morrisons H1 revenue tops £9bn, but profit falls

Takeover target Morrisons said on Thursday its first-half revenue including fuel rose 3.7% to £9.05 billion — but profit before tax and exceptional fell 37.1% to £105 million in the six months to August 1.

The Bradford-based supermarket giant said it expects retail price inflation during the second half, driven by commodity price increases and freight inflation and the current shortage of HGV lorry drivers.

Nonetheless, Morrisons left its guidance unchanged, saying its expects 2021-22 profit before tax and exceptionals to be higher than the £431 million achieved in 2020-21.

“Assumptions for the second half include significantly lower lost profit, minimal further direct COVID-19 costs, and mitigation of potential sustained cost increases in the supply chain,” said the firm.

In its outlook, Morrisons said: “The whole British food industry is currently facing into the continued challenges of COVID-19 and sustained supply chain cost increases, which are largely outside of our control.

“However, we are working to address those challenges and second-half 2021/22 profit before tax and exceptionals is expected to be considerably higher than the £105m achieved in the first half.

“We are planning for significantly lower lost profit year on year in the key business areas of fuel, café, and food-to-go …

We expect some industry-wide retail price inflation during the second half, driven by sustained recent commodity price increases and freight inflation, and the current shortage of HGV drivers.

“We will seek to mitigate these and other potential cost increases, such as any incurred to maintain good on-shelf availability.”

The £7 billion takeover battle for Morrisons between two US private equity groups looks set to be decided by the rarely used auction process.

Morrisons said on Wednesday it is in talks with Clayton, Dubilier & Rice (CD&R), Fortress Investment Group and the UK’s Takeover Panel about an auction to settle its future.

Morrisons said that as neither bidder had declared its offer final, it is talking to both of them and the Takeover Panel about “an orderly framework for the resolution of this competitive situation” – which would normally be an auction.

Morrisons chair Andrew Higginson said on Thursday: “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 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.”

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