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SYDNEY - Australia's largest supermarket chain, Woolworths, posted a 27.5 per cent jump in full-year profit, cementing its dominant position, and said it expected 2008 earnings to grow up to 23 per cent.
In New Zealand, Woolworths operates the Progressive supermarket group, which includes Woolworths, Foodtown and Countdown.
Woolworths said its net profit rose to A$1.294 billion ($1.5 billion) in the year to June 30, up from A$1.01 billion a year ago. Consensus forecasts were for a surge in net profit to A$1.29 billion, according to a Reuters Estimates survey of 11 brokers.
Last month, the retailer forecast net profit growth of 25 to 27 per cent, as it continued to snatch market share from troubled rival Coles Group, which is being sold to conglomerate Wesfarmers.
Woolworths said net profit after tax in the current year was expected to grow 19 to 23 per cent, and sales in the year to grow 7 to 10 per cent.
Earnings before interest and tax (ebit) was expected to grow faster than sales in the year, it said.
Analysts had expected more moderate growth in 2008 for Woolworths, which has had acquisition hopes frustrated on two fronts.
Woolworths was thwarted in its plans to expand in New Zealand after the Commerce Commission rejected a proposed full takeover bid for general merchandise retailer The Warehouse. New Zealand co-operative Foodstuffs was also denied clearance to bid for The Warehouse. Both supermarket groups are appealing the decision.
Woolworths also bid for two of Coles' general merchandise units at an auction in June, but lost out to Wesfarmers' offer for the entire company.
Woolworths chief executive Michael Luscombe says the retailer will look to boost its growth through acquisitions in this financial year.
Luscombe said the retailer expected to grow organically.
"Of course, as well as that we maintain a constant vigilance on opportunities for acquisitions," Luscombe said yesterday.
"We have been very successful in acquiring businesses both strategic and bolt-on and we continue to look for those opportunities in our business."
The company said yesterday it was well positioned for future growth.
"We plan to accelerate the reinvestment in our business in the coming year, with an accelerated roll-out of many new initiatives we have been developing," Woolworths said.
Consumer electronics earnings rose 20 per cent to A$32.5 million. The division, which includes the Dick Smith and Powerhouse brands, is winning sales on demand for computers, flat-panel televisions and in-car navigation devices.
Luscombe plans to start a company-branded credit card next year and Woolworths may expand into other financial services such as insurance and home loans.
"There are a whole range of financial services over and above a credit card we can consider," he said.
Shares in Woolworths have risen 16.2 per cent this year, beating a flat performance at Coles despite takeover activity, and a 7.9 per cent rise in the broader market.
The Australian Woolworths is not related to London-based Woolworths Group which was founded in 1909 as part of its US parent's expansion, or Woolworths Holdings based in Cape Town.
- Reuters, Bloomberg
