Financial summary
Turnover down 2% to £17.7bn (2012/13: £18.1bn)
Like-for-like sales (ex-fuel, ex-VAT) down 2.8% (2012/13: down 2.1%)
Underlying profit before tax down 13% to £785m (2012/13: £901m)
Non-recurring exceptional costs of £903m
Loss before tax £176m (2012/13: profit of £879m)
Earnings per share (10.2)p (2012/13: 26.7p)
Underlying earnings per share down 8% to 25.2p (2012/13: 27.3p)
Final dividend of 9.2p. Total dividend for the year up 10% to 13.0p (2012/13: 11.8p) in line with guidance
Net debt £2,817m (2012/13: £2,181m) after capital investment of £1,086m (2012/13: £1,016m)
Operating highlights
Morrisons.com launched in January 2014 - performing ahead of plan
Over 100 M local convenience stores now trading; second convenience distribution centre now operational
IT systems programme development progressing well - providing platform for significant future cost savings
18 new supermarkets opened
Fresh Formats - tailored fresh food proposition now in over 200 stores
6,500 Own Brand products successfully launched in year; own label conversion programme complete
Vertical integration - good progress in expanding manufacturing capability
£300m, three year cost saving targets delivered
Strategic update
Comprehensive strategic review completed
Enhanced focus on core supermarket business
major investment in proposition; £300m in 2014/15
£1bn of self help over three years identified - implementation underway
Acceleration of new channel development - online and convenience
Planned exit from non-core activities, including Kiddicare and Fresh Direct
Property review completed
New space pipeline reassessed
Total non-recurring costs of £0.9bn
Resulting in:
Stronger value leadership and a customer winning proposition
Rebased profit outlook
Strong balance sheet
strong investment grade credit rating
predominantly freehold property estate maintained
Substantial cash flow generation
£1bn over three years from operating improvements, working capital and reduced capex
£1bn of property disposals over three years
Generation of meaningful shareholder value over the medium term
commitment to 5% minimum increase in dividend for 2014/15 and a progressive and sustainable dividend thereafter
return of surplus capital as appropriate
Commenting on the results, Sir Ian Gibson, Chairman, said:
"In trading terms this has been a disappointing year for Morrisons, with consumer confidence and market conditions continuing to be challenging. It has however been a period of significant strategic progress as we lay the foundations for a stronger future. Our financial position remains strong.
The review of our business undertaken by the Board, underpins our confidence in Morrisons strategic direction and the long-term prospects of the business. This is reflected in an increased dividend for the year ended 2 February 2014, in line with our previous commitment and consistent with our progressive dividend policy.
In respect of the year ending 1 February 2015 the Board anticipates that the total annual dividend will be not less than 13.65p. Thereafter we expect dividends to grow more slowly than earnings, as dividend cover rebuilds towards our target level of around two times."
Dalton Philips, Chief Executive, said:
"The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail.
We are significantly reducing our cost base and will invest £1bn into our proposition over the next three years, to improve our value even further and to defend and strengthen our competitive position. Customers will see this in our stores as well as in our fast growing online and convenience offers. At the same time we will exit non-core activities, significantly reduce our capital expenditure and deliver improved operating cashflow and return on capital employed.
Together with the strategic value of our vertically integrated supply chain, these measures will provide a firm foundation from which to provide outstanding value to our customers and to generate meaningful shareholder returns over the medium term.
I'm confident that Morrisons will emerge from this period of necessary change as a more focused, more distinctive value leader and well positioned to compete sustainably in the new grocery landscape."
