Shares in Australian retailer Woolworths Ltd fell today (25 August) despite the company posting a 5% increase in annual profits.

Woolworths reported net profit of A$2.12bn (US$2.22bn) for the 12 months to 26 June, up 5.1% on the year. Excluding costs linked to the natural disasters seen in Australia and New Zealand in the last year, Woolworths net profit grew 6.4%. EBIT climbed 6.3% to A$3.28bn.

The retailer, which last month said its annual sales had risen 4.7% to A$54.1bn, said its full-year figures were a “positive overall result”, given “challenging” macro-economic conditions and the “devastating” natural disasters.

Woolworths said it had increased sales, profits and market shares while “investing significantly” in cutting prices for consumers.

Competition with Coles, Woolworths’ nearest rival, has intensified in recent months. Last week, Coles reported a 21.7% jump in EBIT to A$1.17bn. The retailer’s sales increased 6.9% to A$32.07bn.

Food manufacturers have indicated that the competition between Woolworths and Coles is affecting their business, with US food group HJ Heinz, which generates US$1bn in annual sales in Australia, this week calling the country an “inhospitable market”.

Shares in Woolworths closed down 1.52% to A$25.75.