Woolworths says profits could rise 26 percent


Woolworths saw sales jump 25 percent in the fourth quarter of its 2001-02 year.

By Jane Searle

SYDNEY, Australia (CNN) -- Australia's largest grocer, Woolworths Ltd, has forecast a 26 percent jump in full-year profit for 2001-02, after seeing a 25 percent rise in fourth quarter sales.

Woolworths said total sales for the year to June 30 were Aust. $24.47 billion ($13.7 billion).

"The result was in line with our expectations," Woolworths chief executive Roger Corbett said Monday.

Corbett's full-year prediction of 22 to 26 percent profit growth is up on his earlier estimate of 20 to 25 percent, made in April after the release of the third quarter figures(Full Story).

Based on the 2000-01 result of a A$428 million net profit, Corbett's comments suggest a profit in 2001-02 of around $522 million to $539 million.

Woolworths shares jumped 25 cents, or about two percent, to a two-week high of A$12.98 after its announcement to the market.

The shares later slipped back to finish 0.55 percent higher at A$12.80.

The broader market, measured by the S&P/ASX200, finished down 0.32 percent at 3187.3.

Woolworths' sales came to A$6.04 billion ($3.38 billion) in the fourth quarter, with a 17 percent increase in full-year sales to A$24.47 billion. That is a rise of more than A$3 billion on the previous year.

The strong result comes after Coles Myer -- Australia's largest retailer and Woolworths' main rival -- said earlier this year it anticipated 20 percent profit growth in the year to July 2002.

Coles Myer said in March it aimed to double profits by mid 2006, under a five-year plan. The company has an annual turnover of around A$26 billion ($13.8 billion) from its supermarkets and department stores.

Continued growth forecast

Woolworths will release its full-year profit on August 26. Corbett said Monday the company now expected earnings for the full financial year to be in the range of 49 to 50.5 cents a share, after 2 cents a share of goodwill amortization.

Woolworths said the acquisition of Franklins grocery stores added $1.01 billion to the sales result. The Australian grocer bought 72 Franklins stores last year from Hong Kong-based Dairy Farm International.

Woolworths said in April its third quarter sales were A$3.013 billion, up 17.4 percent on the same quarter of 2000-01.

For the same period, Coles Myer reported sales rose 9 percent to $6.111 million. Coles chief executive John Fletcher said 2002 was "a transitional year" for the retail giant, with "significant one-off executive change and project costs".

Woolworths closed four supermarkets in the fourth quarter of 2001-02 in accordance with Australian Competition and Consumers Commission guidelines.

But the company expects to open another supermarket, and four Dan Murphy liquor stores in the coming financial year.