Morrisons share price edges lower despite special dividend as recovery continues

Morrisons declared a special dividend in its full-year 2018 results – its third in 12 months – but its share price edged lower on Wednesday morning after the company narrowly missed earnings expectations.

The British supermarket chain announced that it would pay a special dividend of 4p a share, following shareholder pay-outs 4p and 2p a share in March and September last year.

‘In a challenging period for customers and an ever-changing British retail scene, the turnaround at Morrisons has continued to progress well,’ Morrisons Chairman Andrew Higginson said.

‘I am delighted that sales and profit again grew strongly, and that we are able to share that growth with our shareholders through increased dividends,’ he added.

Morrisons results: key figures

The British supermarket chain recorded a 2.7% increase in total revenue to £17.7 billion compared with the previous year, with profit before tax up 8.6% to £406 million.

Earnings per share climbed 8% to 13.17p a share from 12.19p in 2017, while net debt increased slightly to £997 million, up from £973 million last year.

Net incremental profit from wholesale, services, interest and online came in at £12 million during the period, bringing the cumulative total so far to £54 million, with the company on track to hit its £75 million –£125 million medium-term target, Morrisons said.

Morrisons share price edges lower as full-year results miss estimates

Analysts had expected the Morrisons to generate £407 million in full-year profit, according to a consensus compiled by the supermarket chain.

However, the company narrowly missed analysts’ forecasts, with it reporting £406 million, helping to send its share price to fall by 3% on Wednesday morning to 223p a share.

Morrisons outlook

Looking ahead, Morrisons said that it remains confident that has plenty of sales and profit growth opportunities in 2019, with the company expecting free cash flow generation to remain strong.

After progressing with its wholesale partnership with convenience store operator McColl’s more quickly than initially expected, Morrisons hit its target of £700 million of annualised wholesale supply sales ahead of its initial end-2018 guidance.

The supermarket chain expects to begin to supply McColl’s remaining 300 convenience stores towards the end of 2019, with some sales benefit likely from the second half. Its plan for £1bn of wholesale supply sales in due course remains unchanged, the company said.

‘This turnaround is based on improving the shopping trip for customers, making Morrisons more popular and accessible,’ Morrisons CEO David Potts said.

‘And our customers are noticing. Most pleasing of all was another big increase in customer satisfaction, now up a full 20 percentage points in the last four years, which is all down to the friendliness and expertise of our team of unique food makers and shopkeepers,’ he added.