It’s been an extraordinary few years for supermarket chain Morrison (MRW), and chief executive David Potts is celebrating the group’s return to form by announcing a 4p special dividend. That amounts to a £237m handout – something Mr Potts says is possible thanks to “meaningful, sustainable sales and profit growth”, not to mention strong free cash flow. In fact, that strong cash flow helped reduce group debt by another £221m last year, allowing the grocer to comfortably beat its target to end the financial year with less than £1bn in net borrowings.
Becoming a “differentiated” company has also been an important part of the strategy. To this end, it now operates a thriving wholesale operation, with sales expected to exceed £700m (including tobacco) by the end of 2018, and £1bn in due course. But this shouldn’t distract from what Morrison does best: last year like-for-like sales grew 2.8 per cent (excluding fuel), driven by more customers and higher volumes.
Analysts at Panmure Gordon expect pre-tax profit of £407m for the year ending January 2019, giving EPS of 12.9p, compared with £369m and 11.8p in FY2018.
| WM MORRISON (MRW) | ||||
| ORD PRICE: | 226p | MARKET VALUE: | £5.32bn | |
| TOUCH: | 225.7-226p | 12-MONTH HIGH: | 254p | LOW: 205p |
| DIVIDEND YIELD: | 2.7%* | PE RATIO: | 17 | |
| NET ASSET VALUE: | 193p | NET DEBT: | 21% | |
| Year to 4 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 17.7 | -176 | -10.2 | 13.0 |
| 2015 | 16.8 | -792 | -32.6 | 13.7 |
| 2016 | 16.1 | 217 | 9.5 | 5.0 |
| 2017 | 16.3 | 325 | 13.1 | 5.4 |
| 2018** | 17.3 | 380 | 13.3 | 6.1 |
| % change | +6 | +17 | +1 | +12 |
| Ex-div: | 24 May | |||
| Payment: | 28 Jun | |||
| *Excludes 2018 special dividend of 4p a share **53-week period | ||||
