Morrisons posts annual loss of £1bn as debt-financing costs bite

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Wm Morrisons, the private equity-owned UK supermarket chain, made a loss of £1bn last year, partly because of high debt-financing costs. 

The chain, which was bought by US buyout firm Clayton, Dubilier & Rice for £10bn in 2021, reported finance costs of £735mn, including interest on external debt and other non-cash charges in the year to October 29, up from £593mn in the previous period.

This contributed to a loss before tax of £1bn on revenue of £18bn in the year, compared with a loss before tax of £1.5bn in the 65 weeks to October 30, 2022, according to filings at Companies House for the chain’s parent company. 

About £400mn of the finance costs are annual interest payments on borrowings of about £5.4bn. This is roughly what it paid in annual dividends and interest before it delisted, according to a person familiar with its finances.

Morrisons has had to contend with fierce competition and rising costs as well as high interest rates. It lost its place as the UK’s fourth-biggest grocer to the German discounter Aldi in 2022. 

Fuel sales in the year to the end of October fell £561mn to £3.4bn, primarily because of lower prices, according to the filings. Operating profit before exceptionals was £70mn, versus a loss of £63mn in the previous period, while underlying profit rose to £970mn from £911mn. Net debt, including leases and preference shares, rose to £8.5bn from £8bn.

Morrisons does not need to refinance its debt until 2027, the person familiar with its finances said.  

In January, Morrisons agreed a £2.5bn deal to sell its petrol forecourt business to sister company Motor Fuel Group. The “vast majority” of the proceeds — almost £2bn — will be used to reduce debt, Morrisons’ finance chief said in January.

The chain has been trying to turn around its fortunes under new chief executive Rami Baitiéh.

“Since the pandemic, Morrisons has not been on peak form,” Baitiéh told journalists in January. “Our market share has slipped slowly but consistently . . . our like-for-like [sales] . . . have been below the pack for a while.” He said the company had “work to do” on improving service, prices and ranges.

The company said on Tuesday: “Morrisons’ financial performance highlights the progress the company has made, delivering six consecutive quarters of like-for-like growth.”

It added that statutory profitability had been affected by “a number of non-cash items, including depreciation and amortisation, as well as exceptionals. The underlying performance of the business is strong.”


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