By Mike Cherney
SYDNEY--Australian grocer Coles held its dividend steady despite a drop in half-year net profit, which in part reflected the past sale of its fuel and convenience business.
The company said half-year statutory net profit in the six months through December was 589 million Australian dollars (US$385 million), down 8.4% from the prior year. Market expectations were for A$526 million, as assessed by FactSet.
Net profit from continuing activities was A$594 million, down 3.6%. On an underlying basis, adjusted for implementation costs for distribution centers and customer fulfillment centers, net profit from continuing operations was A$626 million, or roughly flat.
Earnings before interest and tax, or Ebit, from continuing operations were A$1.06 billion, up 0.6%. Adjusting for the implementation costs, underlying Ebit rose 3.3% to A$1.11 billion.
Revenue from continuing activities was A$22.3 billion in the half, up 6.7%.
Coles declared an interim dividend of 36 Australian cents per share, the same as last year.
The fiscal first half performance was driven by the company's main supermarkets division, where sales revenue rose by 4.9% amid elevated inflation across the economy. In liquor, sales revenue grew 1.8%.
Looking ahead, Coles said that in the first eight weeks of the fiscal third quarter, supermarket sales were up 4.9%, underpinned by volume growth. It added that it is seeing deflation in fresh produce and meat, and continued moderation in packaged inflation.
Liquor sales revenue declined 2.2% in the first eight weeks of the third quarter, reflecting reduced discretionary spending among consumers. The company also flagged a A$10 million loss on property for the fiscal second half, and increased financing costs.
The supermarket sector in Australia is dominated by Coles and rival Woolworths, with public scrutiny increasing in recent months amid cost-of-living concerns. Regulators recently launched an inquiry into supermarket pricing.
Write to Mike.Cherney at mike.cherney@wsj.com
(END) Dow Jones Newswires
02-26-24 1754ET
