Sainsbury increases 2013 interim dividend by 4.2%

DividendMax Ltd.

Sainsbury increases 2013 interim dividend by 4.2%

Financial summary

Total sales (inc VAT, inc fuel) up 4.4 per cent to £13,953 million (2012/13: £13,365 million)

Total sales (inc VAT, ex fuel) up 4.0 per cent

Like-for-like sales (inc VAT, ex fuel) up 1.4 per cent

Underlying profit before tax up 7.0 per cent to £400 million (2012/13: £374 million)

Underlying basic earnings per share up 9.2 per cent to 16.6 pence (2012/13: 15.2 pence)

Return on capital employed of 11.4 per cent (2012/13: 10.8 per cent)

Return on capital employed excluding pension fund deficit of 10.5 per cent (2012/13: 10.3 per cent)

Interim dividend of 5.0 pence, up 4.2 per cent (2012/13: 4.8 pence)

Statutory

Revenue (ex VAT, inc fuel) up 4.3 per cent to £12,684 million (2012/13: £12,160 million)

Profit before tax up 9.1 per cent to £433 million (2012/13: £397 million)

Basic earnings per share up 8.5 per cent to 17.9 pence (2012/13: 16.5 pence)

Operating performance

Outperformed the market, increasing market share to 16.8 per cent(6), the highest for a decade, completing 35 consecutive quarters of like-for-like sales growth

Excellent customer service levels winning 15 out of 28 Grocer 33 Service and Availability awards

Operational cost savings of around £55 million, on track for around £100 million for the full year

Improved underlying operating margin by 7 bps to 3.47 per cent (up 6 bps at constant fuel prices)

Supermarket of the Year (6th time in eight years) and Convenience Chain of the Year (4th consecutive year), Retail Industry Awards. Online Retailer of the Year (2nd consecutive year), Grocer Gold Awards

FTSE 100 Business of the Year, National Business Awards

Defined benefit pension fund triennial valuation complete resulting in funding deficit of £592 million, a £635 million improvement on the 2009 valuation. Recovery plan agreed in 2009 remains unchanged

Strategy

Great Food:Own-brand growing at over twice the rate of branded goods, by Sainsbury's re-launched and Taste the Difference showing double-digit growth. Achieved 100 per cent British fresh pork, to complement our existing 100 per cent British fresh chicken and 100 per cent British or Irish fresh beef

Compelling General Merchandise and Clothing: Strong growth at around twice the rate of food sales. Successfully re-launched Tu clothing brand and extended by Sainsbury's brand into general merchandise

Complementary Channels and Services: Groceries online growing at over 15 per cent, with over £1 billion in annualised sales and orders regularly exceeding 180,000 a week. Plans announced for an online fulfilment centre at Bromley-by-Bow. Convenience growing at over 20 per cent, opening around two new stores each week. Sainsbury's Bank remains on track to move to full ownership by the end of January 2014

Developing New Business: Launched Mobile by Sainsbury's and opened fourth hospital out-patient pharmacy

Growing Space and Creating Property Value: Opened 393,000 sq ft of space over the half-year, comprising six supermarkets, 50 convenience stores and two extensions. Property profits were £18 million. Property value up £0.3 billion from March 2013 to £11.8 billion. Following a review of our property pipeline we have identified some sites where we no longer wish to build a supermarket, resulting in a £92 million impairment within one-off items

David Tyler, Chairman said: "We have had a strong first half to the year, outperforming the market in what remains a tough trading environment. We have grown our underlying basic earnings per share 9.2 per cent to 16.6 pence, pension-adjusted return on capital employed is up at 10.5 per cent and our interim dividend is 5.0 pence, up 4.2 per cent."

Justin King, Chief Executive said: "Our share of the grocery market is the highest for a decade at 16.8 per cent following 35 consecutive quarters of like-for-like sales growth. We are helping customers Live Well for Less through high-quality, affordable own-brand products, Brand Match, Nectar and targeted coupon-at-till promotions.

"Whilst customers' budgets remain tight and any recovery in the economy may take time to take effect, our consistent strategy and strong values-driven culture mean we are well placed to continue to deliver for customers, colleagues and shareholders."

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