Woolworths HY Profit Up 28.0%; Sees Endeavour Separation To Take Place In June 2021

Woolworths Group Limited (WOW.AX) reported that its net profit after tax attributable to equity holders of the parent entity after significant items for half-year period ended 3 January 2021 increased 28.0% to A$1.14 billion from A$887 million in the prior year.

Net profit after tax from continuing operations attributable to equity holders of the parent entity rose 15.9% to A$1.14 billion from A$979 million in the previous year.

Group sales increased 10.6% to A$35.8 billion from last year, with strong sales growth across all Group businesses except Hotels. Australian Food, BIG W and Endeavour Drinks all reported double-digit sales growth on the prior year.

Group eCommerce sales increased by 77.9% to A$2.9 billion in the half, with eCommerce penetration of Group total sales increasing by 310 bps to 8.2%.

Australian Food total sales for the half increased 10.6% to A$23.4 billion, with comparable sales increasing 9.3%. eCommerce sales increased 91.8% to A$1.8 billion, with sales penetration for the half of 7.7%.

Looking ahead to the rest of the financial year, the company expects sales to decline over the March to June period compared to the prior year in all businesses, with the exception of Hotels where venues were closed for much of the final four months last year, as it cycle last year's COVID surge. However, the company expects COVID-related costs to be materially below the prior year, subject to no further widespread prolonged lockdowns.

The Board has declared a dividend of 53 cents per share, up 15.2% on the prior year.
Meanwhile, Woolworths said it now expects Endeavour Group separation to take place in June 2021, most likely via a demerger.

On 3 July 2019, Woolworths announced that it intended to combine its retail drinks and hotels businesses to create Endeavour Group through a restructure of Endeavour Drinks and subsequent merger with ALH Group. The restructure and merger were completed in February 2020 with the intention to subsequently pursue a separation of Endeavour Group later that year.

In March 2020, the separation was postponed to calendar 2021 due to the Group's prioritisation of its COVID response and reflecting the uncertain operating environment at that time.

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