Sir Ken leaves on a high as Morrisons profits jump

Click to follow
The Independent Online

Sir Ken Morrison was able to bow out from the supermarket chain Morrisons on a high yesterday as the group reported a 66 per cent jump in profits and announced a £1bn return of surplus capital to shareholders.

"I am very pleased to be passing on the baton to a company that has returned to health," Sir Ken said.

Pre-tax profits rose to £612m in the year to 3 February, up from £369m last year, while turnover increased 6 per cent to £13bn. Like-for-like sales, excluding fuel, were up 4.6 per cent.

Marc Bolland, the chief executive, said the company had added half a million customers per week over the Christmas trading period, due in part to the company's TV ad campaign featuring a host of stars, including Lulu and Alan Hanson. The new customers had returned "as they liked what they saw", he said.

Mr Bolland said that Morrisons had been able to retain its credentials for both freshness and value, which he said was particularly important as the country experiences "its lowest consumer confidence since 1994". More than 8,000 lines have been relaunched through the year, and the company's store overhaul is on track to be completed by July this year, he added. Eight new stores were opened over the year.

The £1bn share return will be delivered to shareholders over two years, with £500m of shares likely to be bought back this year. The group also raised its dividend by 20 per cent, to 4.8p.

For a time, it looked as though Sir Ken's career could end in disaster, after the company's bungled integration of Safeway following its £3.35bn acquisition of the chain resulted in five profits warnings and a £374m loss. But over the past two years, Morrisons has been turned around, and has been steadily taking market share from its rivals, particularly Tesco.

Asked whether he now felt justified in having taken on Safeway, Sir Ken said: "At the end of the day, we got reasonable satisfaction from it, and we got a large strike forward that we wouldn't have got without an acquisition of that size. It brought great benefits for the business."

"Sir Ken looks to be walking into the sunset a happy man – all of the group's key financial metrics are moving in the right direction, topped via a return of £1bn to group shareholders," said Keith Bowman, an equity analyst at Hargreaves Lansdown.

But Philip Dorgan, an analyst at Panmure Gordon, warned that the future would be rockier for the Morrisons team. "A great year, but life gets tougher from here on in," he said. "Life without Sir Ken will be hard, and we think that the good work is in the price."

The deputy chairman, Sir Ian Gibson, succeeds Sir Ken as non-executive chairman.