Woolworths lifts full-year profit target


Woolworths in Australia says it may grow profits 20-25 percent this financial year

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Australia's biggest grocer, Woolworths Ltd, has lifted its full-year profit target after seeing sales rise more than 17 percent in the third quarter of 2001-02.

Woolworths chief executive Roger Corbett said full-year earnings could grow by 20 to 25 percent if economic conditions and trading patterns for the first three quarters of the year were maintained.

Corbett's bullish forecast comes three weeks after Woolworths' arch-rival in general retailing, Coles Myer, said it was on track to deliver 20 percent profit growth in the year to July 2002.

Coles Myer said it also aimed to double profits by mid-2006 under a five-year growth plan.

Corbett said Woolworths lifted March quarter sales to $3.013 billion (Aust $5.685 billion). This represented a 17.4 percent gain on the same quarter of 2000-01, and a rise of 18.4 percent from continuing operations.

Total year to date sales were $9.771 billion (A$18.436 billion), up 14.6 percent on the previous year, and up 15.9 percent on a continuing operations basis.

Business 'consistent'

In a statement to the Australian Stock Exchange, Corbett said business was "consistent" across all divisions.

In addition to its food and liquor base in supermarkets, Woolworths sells general merchandise and operates petrol outlets. It has also expanded into consumer electronics via its purchase of the Tandy brand in Australia.

Last year Woolworths bought 72 Franklins grocery stores from Hong Kong-based Dairy Farm International.

Corbett told the ASX the company anticipated earnings for the full financial year to be in the range of 48 to 50 Australian cents (a 20 to 25 percent increase) after 2 cents per share of goodwill amortization.

He said this assumed "the trading patterns of the first three quarters carry on, and the present business and economic climate continues".

Buoyant economy

Australia's economy has been one of the most buoyant in the industrialized world, with growth of 4.1 percent last year and an expectation that growth this year will be 3.5 to 3.75 percent. Much of that is being driven by consumer demand, particularly in the housing sector.

Last month Woolworths reported net profit for its first half to January 2002 was up 24.3 percent to A$295.5 million ($154 million), on sales of A$12.75 billion.

In the same month, Coles Myer reported first-half net profit of A$212 million ($112 million) on sales of A$13.28 billion.

Woolworth shares, which hit a record high of A$12.92 on March 13, were up 20 cents or 1.58 percent on Friday's close to A$12.87 at midday Monday.