Retail giant Woolworths expects consumer confidence to remain weak for the next 12 months as Australians deal with cost of living pressures and a flat job market.
But it hopes the end of the federal election campaign on September 7 will help lift sentiment.
Woolworths boss Grant O’Brien said the company hoped to grow its net profit by between four and seven per cent this year, though the state of consumer sentiment would continue to hurt trading conditions.
“We do expect retail conditions to remain somewhat subdued during financial year 2014 with ongoing consumer caution coming from cost of living pressures, flat job market and the uncertainty that has been caused by the federal election,” he said.
“We’ve been calling out for the last couple of months the uncertainty that the election brings and we are looking forward to that passing.”
Woolworths made a net profit of $2.35 billion from its continuing operations in the 2012/13 financial year, up six per cent on the previous year in normalised terms.
Mr O’Brien said Woolworths was sticking with its ambition to lift the company’s profitability toward a year-on-year growth rate of more than 10 per cent.
But he admits that target is still a while off.
“While there is much more to do to realise the ambition of double digit profit growth in the future, the evidence shows we are headed in the right direction,” Mr O’Brien said.
The company kept its cost base flat in 2012/13 despite opening new stores and dealing with higher electricity prices, which helped lift its profitability.
Keeping costs down also helped the company reduce the cost of an average basket of goods by nearly three per cent during the year, he said.
Mr O’Brien said all of Woolworth’s established operations recorded strong earnings growth during the year.
Pre-tax earnings for the company’s core food and liquor division were up nearly nine per cent to $3.06 billion, while earnings from its petrol division rose eight per cent to $138 million.
But the roll out of its home improvement business Masters continued to weigh on Woolworths bottom line, with the division posting a $139 million loss during the year.
Woolworths announced a fully franked final dividend of 71 cents per share for a total full year dividend of $1.33.
Shares in the retail giant on Wednesday lifted 27 cents to $34.18.
