UK supermarket operator J Sainsbury has posted a 12% increase in full-year underlying pre-tax profits to GBP267m (US$502m), ahead of market forecasts, but saw its shares fall by 3% as it warned that energy costs were rising this year.
The company, which is one year into a three-year recovery programme, posted pre-tax profits from continuing operations of GBP104m, against a pre-tax loss of GBP238m for 2004/05. Basic earnings per share from continuing operations reached 3.8 pence, against a loss per share of 17.4 pence in 2004/05, while underlying basic earnings per share from continuing operations rose to 10.5 pence from 8.3 pence in 2004/05.
Total sales at Sainsbury’s supermarkets rose by 5.7% to GBP16.99bn, with like-for-like sales, excluding petrol and adjusted to account for the timing of Easter, up by 3.7%. Underlying operating profit rose by 14.3% to GBP352m.
“This has been a strong year of recovery for Sainsbury’s with a continued focus on the implementation of the plans outlined in October 2004,” said chairman Philip Hampton. “In March 2006 we completed a major refinancing, improving our long-term funding profile and providing a flexible financing platform for the future as well as underpinning the Making Sainsbury’s Great Again plan.”
Justin King, chief executive, said: “We have made good progress during the year and we are on track in our Making Sainsbury’s Great Again plan. Excluding petrol and the Bank, we delivered sales growth of GBP722m, representing a solid start towards our goal to grow sales by GBP2.5bn as part of the Making Sainsbury’s Great Again plan.”
King added that the end of the financial year had seen the company’s fifth consecutive quarter of like-for-like sales growth which demonstrated “a real step forward in our recovery as customers notice and experience the many improvements we have been making to our offer”.