Supermarkets drive sales at Woolworths

$30 billion in total group revenues in just six months is nothing to be sneezed at

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published February 28, 2013 1:39 pm AEDT

Supermarket giant, Woolworths Limited (ASX: WOW) has reported a $1.15 billion profit for the six months to December 2012, a 19% rise over the previous period.

Australian Food and Liquor sales rose 4.7% to more than $20.4 billion, while New Zealand Supermarkets produced a 3.1% rise in revenues to $2.3 billion. Big W also posted strong growth, with revenues rising 3.6%. The Hotels and Home Improvement divisions recorded big jumps in revenues – up by 19.3% and 54.6% respectively.

All up, sales from continuing operations reached $30 billion, following the sale of the Dick Smith consumer electronics division last year. A fully franked dividend of 62 cents a share was declared, up 5.1% over the previous year.

The company announced that it was gaining market share, perhaps at the expense of Coles – owned by Wesfarmers Limited (ASX: WES), or IGA supermarkets, supplied by Metcash Limited (ASX: MTS).

This was a pleasing result, and Woolworths upgraded its full year growth estimates slightly from between 3-6% to 4-6%, on the back of strong results from all its sectors, despite challenging trading conditions in the Australian and New Zealand retail sectors.

Expansion into new ventures appears to be on the cards, with news out today that the company may be interested in buying into a Barossa Valley winery. That comes as the South Australian government is reportedly considering allowing limited wine sales in the state's supermarkets.

Foolish takeaway

With plans to continue rolling out stores across all its divisions, strong cost control and ongoing improvements to its existing business, as well as potential moves into new areas, Woolworths looks well placed to generate earnings growth in the years ahead.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Woolworths.

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