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Morrisons’ profits surge for first time in five years

RBR Staff Writer Published 10 March 2017

Morrisons has reported a 11.6% increase in its profit to £337m in the full year 2016, compared to £302m in 2015.

It is the first time in five years that the British supermarket company has seen an increase in like-for-like sales and underlying operating profit before tax which the company attributed to the implementation of a turnaround strategy.

The company's total revenue despite store closures had increased to £16.3bn at 1.2% from the 2015 earnings of £16.1bn.

Morrisons CEO David Potts said: “Our full year of like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do.

"But, it's only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”

The supermarket chain expressed confidence on continuing its turnaround plan for further growth. It has also warned of uncertainties in the future, particularly the impact on prices of imported food products if sterling remains at lower levels.

Morrisons further stated that it expects increase in both depreciation and pension costs and will carry on spending in colleague pay rates. All this, it says have been covered in its strategy.

In 2016, the supermarket company achieved £393m in cost savings, taking its three-year tally to £1.04bn to surpass its target of £1bn.

Morrisons’ three-year total in free cash flow went up to £2.3bn, surpassing its target of £2bn courtesy of the £670m of free cash flow generated in 2016. Its overall net debt was reduced to £1.2bn with 2016 seeing it come down by £552m year on year.

Morrisons reported that it had closed eight stores in 2016, opened a new store while extending five stores.

The supermarket company has proposed 3.85p as final dividend and total 5.43p, reflecting a hike by 8.6%.

Image: Morrisons Supermarket in Saltney, Flintshire, UK. Photo: courtesy of Rept0n1x/Wikipedia.org.