Woolworths lifted 2016-17 dividend by way of higher ordinary payouts and a one off payment of 10 cents a share, but the payout to shareholders of $1.03 a share remains well short of the $1.39 a share paid in 2014-15, when the company’s Masters hardware adventure was starting to go bad and the previous board and management lost control of its supermarkets business.
Cleaning up that mess saw the dividend fall to 77 cents a share for 2015-16 and 84 cents for 2016-17. The final for 2017-18 of 50 cents was unchanged from a year ago but was boosted by the special one off payment of 10 cents a share.
Without the special dividend, the final would have been lower than a year ago at 40 cents a share and the total payout for 2017-18 of 90 cents a share would have only been up 6 cents from 2016-17’s figure of 84 cents.
Woolies chair, Gordon Cairns said in the statement yesterday that Capital management has been an area of focus and today the Board has announced a fully franked final dividend of 50 cents per share.
This takes the ordinary dividend for the year to 93 cents per share, an 11% increase on the prior year. "In considering the improved trading performance and balance sheet strength in the year as well as the benefits from the new Petrol alliance, the Board has also announced a fully franked special dividend of 10 cents per share resulting in a H2 2018 payout ratio of 104%.
“This special dividend and the removal of the 1.5% Dividend Reinvestment Plan discount announced in February, reflect our commitment to disciplined capital management, including distribution of franking credits to shareholders as appropriate. Further capital management will be considered as part of a successful exit of our Petrol business.”
Now the payout is back above $1 a share and the share price is up from a low of $20.74 in June 2016 (it eased 0.6% to 29.41 yesterday) and earnings are solid, but the plastic bag debacle continues to bedevil the company and management.
Woolworths revealed a 12.5% jump in profit for the year to June 24 thanks to rising sales and margins from its supermarket business, offset another large (but smaller than a year ago) loss at Big W.
The retailer reported net profit after tax of $1.72 billion for 2017-18, up from $1.5 million last year.
Australian supermarket sales grew 4.3% in both gross and comparable terms, while supermarket earnings before interest and tax grew 9.6%.
The company’s discount department store chain, Big W, reported a $110 million EBIT loss, which was better than last year when it lost $151 million. CEO Brad Banducci said sales first seven weeks of 2018-19 slowed as customers adjusted to the removal of single-use plastic bags even as rival Coles backflipped and continued to offer free bags, as well as due to falling prices for meat, fruit and vegetables (the early impact of the drought in NSW and Queensland).
“We expect sales momentum to improve over the course of the half (year) and are confident that we have strong plans in place to be ‘consistently good’ at the fundamentals and drive further shopping differentiation relative to our competitors," Mr Banducci said in the group’s results statement yesterday.
In New Zealand, its supermarket operations are delivering "strong core sales momentum" following investments over the last two years, he added.
The company expects ongoing progress from its budget department store chain BIG W in 2018-19, with a further reduction in losses likely.
“However, financial performance will continue to be driven by the key Christmas trading period," Mr Banducci said.
