Morrisons' share price opens 4.2 per cent up, despite plummeting pre-tax profits

 
Joe Hall
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Morrisons non-executive chairman Sir Ian Gibson said "conditions were tough" for the company (Source: Getty)

Shares in Morrisons opened 4.25 per cent higher this morning, even though results published today showed pre-tax profit plummeted by just under a third for the six months ended 3 August, as the company struggles to rise above a slowdown in the grocery market.

The struggling supermarket's half-year results revealed a pre-tax profit of £239m - a 31 per cent drop from £344m in the same period last year. Total turnover for the period came in at £8.5bn, a 4.9 per cent drop.

Like-for-like sales dropped by 7.4 per cent as the number of like-for-like items in the basket also slipped.

Non-executive chairman Sir Ian Gibson said despite its struggles, Morrisons was building towards a better future. In March the company launched a "three-year plan", under which it will spend £1bn cutting prices on 1,200 products, including £300m this year. The company said it was confident it will generate £2bn of cash and £1bn of savings over three years.

Gibson said in a statement:

Conditions are tough, and the industry is going through unprecedented change. Our first-half results reflect the reset of the business we announced in March. Morrisons is now well underway with building the foundations for a better future.

The Board is confident of the new strategy and Morrisons financial position remains strong. In line with the policy we set out in March, we are increasing the interim dividend by 5% to 4.03p, and confirm our commitment to pay a total dividend for 2014/15 of not less than 13.65p.

Today chief executive Dalton Philips said he was already encouraged by the progress made since installing the three-year plan, but warned it was still too early to see what the real benefits will be.

Philips said:

Although it is too early to see the benefits of the three-year plan in the sales line, Morrisons is getting back on the front foot, and implementing change and innovation at real pace throughout the business.
We are meeting the challenges of structural change with decisive action and are on track to become a more distinctive value retailer for the next generation of grocery retail.
In January Morrisons tied-up with Ocado, with the online grocer taking on management of Morrisons.com.
Ocado fared a lot better in its own half-year results revealed today, with sales at £232m, in a sign that the groceries delivery business is moving ahead of its supermarket rivals.

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