By Archishma Iyer
(Reuters) -Australia’s largest supermarket chain Woolworths Group Ltd warned on Wednesday of a tough consumer environment but said food sales had shown resilience in the first two months of the financial year, driving its share price strongly higher.
Shares of the retail giant were trading 4.8% higher at A$37.94 in morning trade, outperforming the benchmark index’s 0.5% rise.
Total Australian Food sales, the biggest revenue generator for Woolworths, grew 5% for the fiscal year 2023 on the back of elevated inflation, the company said.
Under its Australian Food business, Woolworths Food Retail sales growth so far this financial year was about 6.5%, with price pressures continuing to moderate to low single digits due to strong volume growth.
“Looking ahead to FY24, we expect food inflation in Australia and New Zealand to continue to moderate but will likely remain elevated in some packaged categories,” CEO Brad Banducci said in a statement.
The company said annual net profit after tax, before significant items, was A$1.72 billion ($1.11 billion), compared with A$1.51 billion a year earlier. Jefferies had estimated net profit of A$1.69 billion.
The Sydney-based company declared a final dividend of 58 Australian cents per share, higher than 53 cents per share declared last year.
“We think the result will be taken well in the context of yesterday’s weaker result from Coles,” Citi analysts said in a research note.
Australia’s second-largest grocer, Coles, on Tuesday said annual profit from continuing operations fell slightly, missing analysts’ forecasts.
($1 = 1.5567 Australian dollars)
(Reporting by Nausheen Thusoo and Archishma Iyer in Bengaluru; Editing by Krishna Chandra Eluri and Stephen Coates)