WM Morrison Supermarkets PLC (MRW): Uncertain Outlook Overshadows Impressive Like-For-Like Sales Growth

After climbing more than 20% over the past year, shares of WM Morrison Supermarkets PLC (LON:MRW) fell sharply following the release of full-year results, which included the first annual like-for-like sales growth for the supermarket chain in five years. The company shares dropped over 5% in early-trading this Thursday as Morrison indicated that lower sterling levels can affect imported food prices. In addition the food-retailer expects depreciation and pension costs on a higher side. For the full-year, like-for-like (LFL) transactions were up 4% and LFL sales grew 1.7% (2.5% in the most recent quarter), helping MRW boost revenue by 1.2% to £16.3 billion, despite the company shutting down eight stores as per its Fix, Rebuild and Grow strategy. Profits grew a lot faster with underlying (excludes one-offs) operating profits up 8.3% to £432 million as margin improved slightly, prompting MRW to raise final dividend by 8.6% to 3.85p per share. “I am confident that strong execution will drive sustained dividend growth and improving returns for Morrisons shareholders”, said MRW chairman Andrew Higginson. MRW crossed its three-year £1 billion savings target by realising £393 million cost savings in 2016. While it’s looking for further opportunities to save costs, MRW achieved £18 million incremental profit out of its medium term target of £50–£100 million in wholesale, services, interest and online. An indication of further benefits in this direction was the net debt reduction of £552 million that would bring down interest-costs going forward. “But, it’s only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow”, said CEO David Potts.

The party continues for multi-line insurer Aviva PLC (LON:AV) shareholders

Shares of the London-based insurer are on a tear since it reported strong operating profit growth (13%) for the first-half of 2016 as it saw strong performance across the board: growth in UK Life, Digital Platform and Fund Management easily outweighed the decline in its General Insurance and Health division. Back then, Aviva had also raised the interim dividend by 10% to 7.42p. “Aviva’s results are simple and clear cut: more operating profit, more capital, more cash, more dividend. And there is more to come”, said CEO Mark Wilson in a statement issued on Thursday, along with full-year results. “Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options. We are now actively planning a capital return to our shareholders and debt reduction in 2017 and will invest further to grow our businesses”, he added. Aviva shares climbed as much 6% this Thursday as it decided to increase 2016 dividend payout by 12% to 23.3p per share, compared to 20.8p in 2015. The management has delivered on its narrative to boost shareholder returns with improving operating profits, and, as a result, has been rewarded with the company’s market capitalization boosted by almost 50% after a sharp decline in the aftermath of Brexit.