Sainsbury's Books Higher H1 Profits

"Sainsbury's has made a strong start to the year, delivering continued outperformance in what has remained a challenging market.

14 Nov 2012 ---

Financial summary

- Total sales (inc VAT, inc fuel) up 4.0 per cent to £13,365 million (2011/12: £12,848 million)
- Total sales (inc VAT, ex fuel) up 4.1 per cent
- Like-for-like sales (inc VAT, ex fuel) up 1.7 per cent
- Underlying profit before tax(1) up 5.4 per cent to £373 million (2011/12: £354 million)
- Underlying basic earnings per share(2) up 9.4 per cent to 15.2 pence (2011/12: 13.9 pence)
- Return on capital employed(3) of 10.9 per cent (2011/12: 10.9 per cent)
- Interim dividend of 4.8 pence per share, up 6.7 per cent (2011/12: 4.5 pence per share)

Statutory

- Revenue (ex VAT, inc fuel) up 4.0 per cent to £12,160 million (2011/12: £11,693 million)
- Profit before tax up 2.5 per cent to £405 million (2011/12: £395 million)
- Basic earnings per share up 4.9 per cent to 17.0 pence (2011/12: 16.2 pence)

Operating highlights

- Outperformed the market, increasing market share to 16.7 per cent(4), the highest for nearly a decade, completing 31 consecutive quarters of like-for-like sales growth
- Nearly 250 million Brand Match coupons printed since its launch a year ago, with 'Cheaper Here Today' coupons issued over 50 per cent of the time
- Celebrated ten year partnership with Nectar, a continuing source of customer insight and loyalty
- Operational cost savings of around £60 million, on track for around £100 million for the full-year
- Underlying operating margin unchanged (up 1 basis point at constant fuel prices)
- Five awards at the Retail Industry Awards 2012 including Supermarket of the Year for the fifth time in seven years and Convenience Chain of the Year for the third year in a row
- World sector leader for food retailers for the sixth consecutive year in the Dow Jones Sustainability Index

Strategy highlights

- Great food: Continued investment and growth in own-brand, with penetration increasing at a faster rate than any other major supermarket. We are 85 per cent of the way through the re-launch of our core by Sainsbury's range which will see 6,500 new or improved products introduced by April 2013
- Compelling general merchandise and clothing: Goes from strength to strength, currently growing three times faster than our food business and gaining market share
- Complementary channels and services: Online continues to perform strongly, growing at over 20 per cent, with grocery orders regularly exceeding 165,000 a week. Our convenience business is expanding by one to two stores each week and is enjoying almost 20 per cent year-on-year growth. Sainsbury's Bank continues to make strong progress, with our share of joint venture post-tax profit up from £7 million to £12 million
- Developing new business: Announced I2C, a joint venture company with Aimia, owners of Nectar. Launched our MP3 music download service; acquired a majority stake in Anobii e-book platform; announced a video on demand service powered by Rovi
- Growing space and creating property value: During the half-year we opened 351,000 sq ft of space, comprising five supermarkets, 49 convenience stores and three extensions. Property profits from sale and leaseback activity were £48 million

David Tyler, Chairman, said: "Sainsbury's has made a strong start to the year, delivering continued outperformance in what has remained a challenging market. We have grown our underlying basic earnings per share to 15.2 pence, return on capital employed remains unchanged at 10.9 per cent and our interim dividend is 4.8 pence per share, up 6.7 per cent."

Justin King, Chief Executive said: "Our share of the grocery market is the highest for almost a decade at 16.7 per cent, with 31 consecutive quarters of like-for-like sales growth. We continue to succeed by remaining focused on delivering quality products, best-in-class service and value for our customers, without compromise.  Brand Match, Nectar and our highly targeted coupon-at-till all reinforce our price competiveness.

"Whilst the wider economic situation remains challenging, we are well positioned to help our customers Live Well For Less. Our long-standing consistent strategy, combined with our customer insight and strong value-driven culture, will continue to deliver for customers, colleagues and shareholders."