The Morrisons (LSE: MRW) share price barely moved this morning, despite the company revealing a big fall in profit in its interim numbers.
Falling profit
Total revenue (including fuel) for the six months to 1 August rose 3.7% to just over £9bn. But like-for-like sales (excluding fuel and VAT) were down 0.3%. This was in sharp contrast to the 8.7% increase reported in the same period last year.
Online like-for-like sales jumped 48% and are now up over 237.1% compared to two years ago, helped by the company’s relationship with Amazon. A total of 328 stores are also now working with Deliveroo to provide grocery home delivery.
However, profit before tax and exceptionals tumbled 37.1% to £105m. This was due to £41m of pandemic-related costs and £80m in lost profit in sales from cafes, fuel and food-to-go. On a statutory basis, pre-tax profit fell 43.4% to £82m.
Looking ahead
Morrisons made no change to its guidance. The UK supermarket expects profit before tax and exceptional items to be above the £431m recorded for 2020/21. However, this is dependent on a reduction in Covid-19 costs, lower lost profit and the company’s ability to manage cost increases relating to its supply chain.
Further ahead, the company expects “material benefits” in 2022/23 as a result of Covid-19 costs not being repeated and the “full recovery of lost profit”.
No dividend
Morrisons also confirmed it would be recommending Clayton, Dubilier & Rice’s offer of 285p per share to shareholders. The latter will be required to approve this offer at the company’s General Meeting in mid-October. This is likely to be the reason for the static share price today.
As a result of the expected takeover, the £7bn cap confirmed that it would not be paying an interim dividend to shareholders.