Morrisons pre-tax profits rise but Brexit weighs

Morrisons shares (LON: MRW) fell this morning after the supermarket revealed a dent in profits.

Despite an 8.7% growth in like-for-like sales for the first six months of 2020, pre-tax profit fell 25.3% to £148m due to costs related to COVID-19 safety measures.

Total revenues at Morrisons were down 1.1% £8.73bn.

The safety costs surrounding COVID-19 cost the supermarket a total of £93m – which was offset by business relief rates to cost a reduced £62.

During the lockdown period, the group hired an additional 45,000 employees.

The supermarket will pay an ordinary dividend of 2.04p. Shares sank 4.5% in morning trading.

Chief executive David Potts said: “From the start of the pandemic we stepped up and put the company’s assets at the disposal of the country to help feed the nation.”

“Morrisons is at the heart of local communities and responded quickly when it mattered most, and we are very grateful for the British public’s appreciation of all the vital work our colleagues are doing. I believe we are seeing the renaissance of British supermarkets.

“We are now looking forward to holding on to what we created in the first half, building on our colleagues’ inspiration and innovation, and sustaining the momentum of a broader, stronger Morrisons. I’d like to again thank every Morrisons colleague for their incredible efforts: you’ve earned your key worker status several times over.”

Speaking of the results revealed by Morrisons today, Richard Hunter, head of markets at Interactive Investor, said: “Contrary to popular belief, the pandemic was not an automatic home run for the supermarkets and the 25% drop in pre-tax profits for Morrisons is proof positive that additional sales come at an additional price.”

“Overall, the reduction in profit for the period and an overall decline in revenues are understandable, but unfortunately both light of expectations,” he added.

Morrisons shares (LON: MRW) are currently trading -4.15% at 186.90 (0900GMT).

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Safiya focuses on business and political stories for UK Investor Magazine. Her interests include international development, travel and politics.