THE nation’s largest supermarket retailer, Woolworths this morning delivered a net profit of $1.7 billion for its financial year ended 30 June, built on earnings up three percent from the previous year.

Both Woolworths and Coles have been under an intense microscope over the past year, with no less than six parliamentary and regulatory inquiries into supermarket activity and allegations of price gouging. This week’s financial results (Coles reported a net profit of $1.128 billion yesterday) will do nothing to diminish that.

The sheer size of the profits has drawn further fire from farmer and consumer groups this morning.

Woolworths this morning posted a 5.6pc rise in sales to $67.9 billion, largely on the back of its Australian supermarkets division. Even adjusted for some big losses in its New Zealand supermarket business, the group net profit was $1.08 billion.

The company’s flagship Australian supermarket division saw sales increased by 3.4pc with eCommerce sales strong throughout the year at +20.2pc.

Store-originated sales declined in the first half ended 31 December as consumer sentiment faded, but had improved somewhat in the fourth quarter, shareholders were told.

For the first time since the first half of 2022, average retail prices declined compared to the prior year with a reduction of 0.2pc and 0.6pc in the third and fourth quarters, respectively, as lower prices – particularly in fresh meat and fruit & veg – were passed through to customers.

Woolworths’ Australian supermarket division showed sales of $50.1b last financial year, up 5.3pc; with pre-tax earnings of $4.82b, up 6pc. The supermarket division’s sales growth slowed in the second half to 1.8pc as inflation moderated despite, while eCommerce growth remaining strong.

“As cost-of-living pressures continued to impact household budgets, we continued to pass on lower prices for customers with average prices in Q4 decreasing by 0.6pc compared to the prior year,” shareholders were told.

While Fruit & Veg deflation eased in the fourth quarter due to cycling improved supply, prices remained below the prior year largely driven by lower fruit prices. Meat prices also continued to decline with average prices 6.4pc below the previous year’s fourth quarter, reflecting lower livestock prices being passed on to customers.

Changing consumer expectations

Woolworths group chief executive, Brad Banducci said after a strong first half, the company worked hard in the second half to address rapidly changing customer expectations following the drop in customer scores in Q3 and a loss of sales momentum.

“In H2, inflation in our food businesses and Big W moderated significantly, as we lowered prices and passed on lower cost prices to customers. Average prices in Woolworths food retail in Q3 and Q4 were down 0.2pc and 0.6pc respectively on the prior year,” he said.

However, cost of living remains the primary concern for Woolworths customers, and the company said it was committed to doing more to help them in the current environment by offering more value on their shopping baskets.

Farmer reaction

Both Woolworths and Coles have been under an intense microscope over the past year, with no less than six parliamentary and regulatory inquiries into supermarket activity and allegations of price gouging. This week’s financial results showing $1 billion-plus net profits for both Coles and Woolworths will do nothing to diminish that.

NSW Farmers said major supermarket profits were a reminder that Australian families are paying the price for competition policy failures.

Vice President Rebecca Reardon said the billion-dollar profit postings were a stark reminder of the ‘profit push’ practices of the nation’s supermarket duopoly, which continued to cause pain at the checkout as well as the farm gate.

“Crunch the numbers and it’s clear that these super profits simply don’t stack up as the cost-of-living crisis continues,” Mrs Reardon said.

“The cost of food increased by more than 14pc between December 2021 and December 2023, and while we’ve had inquiries this year, farmers are still receiving prices below the cost of production for their produce. This means farmers are struggling to afford to produce the food that families are struggling to afford while the grocery giants suck all the profit out between the paddock and plate.”

As several inquiries into supermarket behaviour continued, Mrs Reardon said meaningful competition reform had to be a major priority for the federal government, with emerging issues such as banking and airline competition presenting problems.

“Australians expect a fair go, but there are businesses out there making billions while people struggle, and that’s just not right,” Mrs Reardon said. “The ugly truth is out there, and we need real action, real consequences and real powers for our consumer watchdog, because these businesses will only keep lining their pockets until we pull them up.

“In the short term, a mandatory, enforceable Food and Grocery Code of Conduct – as well as new divestiture powers as a tool to bust apart supermarkets for bad behaviour – is what we desperately need to hold these middlemen and their actions to account.”

Footprint expands

Woolworths currently operates 1111 Australian retail supermarket (including mini Woolies) stores, adding 17 new supermarkets during the year – up from 1095 the previous year, this morning’s full year results disclosed.

The Woolworths board declared a final dividend of 57c per share (down 1.7pc) and a special dividend of 40c. That brought its full year dividends to $1.44 per share, which is up 38.5pc year-on-year.

Woolworths shares were trading at $36.50 a few minutes ago, up around a dollar on yesterday’s close.

• See today’s separate report on Woolworths’ sustainability commitment to zero deforestation.