SYDNEY: Australia's second-largest supermarket chain Coles Group COL.AX on Tuesday posted better-than-expected first-half profit, as it controlled pandemic costs and its earnings were boosted by lockdown-induced consumer spending.
Its shares rose 2% to A$17.05 in early trading, as it also said its expenses had moderated lately after it shelled out A$30 million ($21.6 million) in COVID-19 costs in January.
Coles and larger rival Woolworths WOW.AX have banked on demand from shoppers confined to their homes as they bought everything from groceries to toilet paper in bulk, but have borne extra expenses due to disruptions caused by lockdowns.
Coles' Supermarkets business, its biggest earnings contributor, saw comparable sales grow 1.5% in the half, as curbs in New South Wales, the Australian Capital Territory and Victoria elevated demand and margins.
"As Omicron spread through the community in the early part of January, Supermarkets sales were elevated before moderating later in the month," it said.
The company, which operates more than 800 stores in Australia, said half-year net profit after tax fell 2% to A$549 million ($394.8 million), but beat an estimate of A$517 million from Jefferies, which called it "a solid, clean result".
Coles declared an interim dividend of 33 Australian cents per share, in-line with last year.
It said lockdowns in Melbourne had delayed construction of its customer fulfilment centre in the city by a year and it was now expected to open in fiscal 2024.
While COVID-related costs jumped A$45 million in the half, it said that expenses had now moderated, but trimmed its annual capital expenditure forecast due to construction delays.
It now expects to spend between A$1 billion and A$1.2 billion, compared with A$1.2 billion to A$1.4 billion forecast earlier.
($1 = 1.3904 Australian dollars) - Reuters
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