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Woolworths Group Ltd (ASX:WOW) shares have gained 2% following the release of its financial results for the fiscal year 2024 (FY24). The increase comes despite a significant decline in statutory profit due to various accounting adjustments and impairments.
FY24 Performance Highlights
For the 53 weeks ending 30 June 2024, Woolworths reported notable financial metrics:
- Group Sales: Rose by 5.6% to $6.7 billion.
- Underlying EBITDA: Increased by 5.4% to $6 billion.
- Underlying EBIT: Climb of 3.4% to $3.2 billion.
- Underlying Net Profit: Slight decline of 0.6% to $1.7 billion.
- Statutory Net Profit: A significant drop of 93% to $108 million.
- Final Dividend: Down 1.7% to $0.57 per share.
- Full-Year Dividend: Up 38.5% to $1.44 per share.
The substantial decrease in statutory profit is attributed to $1.6 billion in significant items, including a $1.5 billion impairment of the New Zealand food division. Additionally, a $209 million decline in the value of Endeavour Group Ltd (ASX:EDV) shares contributed to the lower statutory profit.
The FY24 results were bolstered by an extra week compared to FY23, and the company saw a 20.8% increase in total e-commerce sales, reaching $7.96 billion. This growth represented 12.5% of total sales, up from 11% in the previous year.
Segment Performance
Here's a breakdown of performance across Woolworths' various segments:
- Australian Food Sales: Increased by 5.6% to $50.7 billion, with EBIT rising by 8.6% to $3.1 billion.
- Australian B2B Sales: Grew by 6.1% to $4.6 billion, with EBIT soaring by 92.7% to $122 million.
- New Zealand Food Sales: Up 3.2% to NZ$8.17 billion, but EBIT fell by 56.5% to NZ$108 million.
- BIG W: Sales fell by 2.1%, and EBIT decreased by 90.4% to $14 million.
- 'Other' Category: Including Petstock, reported sales of $356 million and an EBIT loss of $123 million.
The slowdown in supermarket sales growth is attributed to moderated inflation and item growth. BIG W faced challenges due to reduced discretionary spending and intense competition, leading to declines in home and clothing sales. However, sales trends improved in the fourth quarter due to price reductions.
Outlook for FY25
Looking ahead, Woolworths expects continued challenges. In the first eight weeks of FY25:
- Australian Food Sales: Increased by 3%, driven by item growth and modest inflation, with e-commerce remaining a strong contributor.
- New Zealand Food Sales: Up 1.5%, with expectations for EBIT to surpass FY24 levels, though it will take time for the business to fully recover.
- BIG W Sales: Remained broadly flat, with an anticipated increase in FY25 EBIT compared to FY24.
Despite the challenges, Woolworths maintains a strong market presence in Australia. The company's revenue and underlying earnings growth suggest a positive outlook for shareholders, though recent gains of close to 20% since May might limit short-term growth potential. Woolworths continues to be a solid blue-chip stock, though there are other ASX dividend shares that may currently offer more attractive opportunities.
