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Woolworths (ASX:WOW) share price rising on earnings boost

Woolworth share price upgrade response to asx share price represented by hands holding up the word wow
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Woolworths Group Ltd (ASX: WOW) shares are on the rise today after the supermarket giant released its half-year results for the period ended 3 January 2021 (HY21) this morning. At the time of writing, the Woolworths share price has jumped 1.15% to $39.54.

Let’s take a look at how Woolworths has been performing.

What’s driving the Woolworths share price?

The Woolworths share price is on the move after the company reported total revenue from continuing operations of $35.8 billion for the period. This compares to $32.4 billion for the half-year ended 5 January 2020.

Woolworths also posted a gain in gross profit which jumped from $9.6 billion in HY20 to $10.5 billion in HY21.

Earnings before interest and tax were $2.1 billion, which is up from HY20’s $1.8 billion.

Basic earnings per share (EPS) came in at 90.5 cents, a 28.1% leap from the 70.6 cents posted for HY20.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 8.7% at $3.4 billion for HY21.

At the end of the period, the business held $2.1 billion in cash and cash equivalents. The prior corresponding period (pcp) posted $1 billion.

Woolworths advised that coronavirus has had a material impact on results. 

While the company reported strong group sales growth of 10.6% for HY21, this was offset by $277 million spent on incremental COVID-19 costs.

The board declared an interim dividend for the period of 53 cents per share, fully franked.

CEO commentary

Woolworths Group CEO Brad Banducci commented on the HY21 results and said:

H1 sales growth was strong across all Group businesses, with the exception of Hotels, with record Christmas trading. Group sales increased by 10.6% in H1 (Q2: +9.0%) with Australian Food, BIG W and Endeavour Drinks all reporting sales growth well above trend. Sales growth in New Zealand Food slowed in Q2 with lower market growth rates impacted by a reduction in international tourism. In Hotels, sales trends improved over the half but growth was below the prior year due to continued COVID-related operating restrictions.

Despite incremental COVID costs of $277 million and the Hotels EBIT being well below the prior year, H1 Group EBIT1 grew by 10.5% to $2,092 million, with NPAT1 up 15.9%. BIG W’s profit improvement was a particular highlight with EBIT of $133 million, up 166% on the prior year.

Woolworths share price snapshot

Over the past year, the Woolworths share price has fallen by 7.3%. Whilst having mostly recovered from their May 2020 lows of around $32, Woolworths shares are yet to reach their pre-COVID highs of around $43.

Based on the current Woolworths share price, the company has a market capitalisation of around $50 billion with 1.3 billion shares outstanding.

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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