Coles share price in focus as dividend lifted and new CEO announced

The supermarket operator posted a surge in profits despite soaring inflation and severe weather.

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Key points

  • The Coles share price might be one to watch this morning after the supermarket giant posted its half-year earnings
  • The company revealed a 17% jump in profit and lifted its interim dividend by 9% to 36 cents per share
  • It also announced CEO Steven Cain will be succeeded by Leah Weckert in May

The Coles Group Ltd (ASX: COL) share price could be in for a big day after the supermarket operator posted its earnings for the first half of financial year 2023 and announced its new CEO.

Shares in the S&P/ASX 200 Index (ASX: XJO) consumer staples giant last traded at $18.30.

Coles share price in focus on higher profits and dividend

  • $643 million net profit after tax (NPAT) – a 17.1% jump on that of the prior comparable period (pcp)
  • $20.8 billion of sales revenue from continuing operations – a 3.9% improvement
  • $1 billion of earnings before interest and tax (EBIT) from continuing operations – a 9.9% jump
  • Basic earnings per share (EPS) from continuing operations lifted 17.2% to 48.3 cents
  • Declared a 36 cent per share interim dividend – a 9.1% improvement

Coles supermarkets brought the company $18.9 billion of revenue last half – a 4.6% year-on-year improvement, while its EBIT reached $991 million – a 10.6% jump.

The segment saw 7.7% price inflation last quarter and 7.1% inflation in the first quarter.

Coles' liquor segment's revenue, meanwhile, came in 2.4% lower at $2 billion and its EBIT fell 19.2% to $80 million.

Of course, the big news from the ASX 200 supermarket operator last half was of the planned sale of Coles Express. The fuel and convenience business is expected to be acquired by Viva Energy Group Ltd (ASX: VEA) for $300 million.

Coles announces new CEO

The Coles share price might also be driven by news of a leadership change today.

The company announced current CEO and managing director Steven Cain will be stepping down in May, with Leah Weckert to take on the top job.

Weckert has been with the company since 2011, holding positions including chief financial officer and chief executive of commercial and express.

What did management say?

Cain commented on the supermarket operator's first half results, saying:

The good news is that supplier cost inflation is starting to ease in the third quarter, particularly in produce.

Many of our suppliers are however still facing increasing cost pressures and shortages of pallets, raw materials, and labour. This has been coupled with increased severe flooding impacting our road and rail networks, particularly for Western Australia and Far North Queensland. We are working together with our suppliers, and both State and Federal governments, to improve food supply chain resilience for all Australians.

What's next?

Coles tips inflation to begin easing this year but expects Australians will tighten their belts amid higher interest rates and cost of living pressures.

Though, the company notes it's well-positioned for such changes. It believes improving availability, population growth, and a decrease in out-of-home dining will have a positive impact.

Coles expects its capital expenditure to come in at between $1.2 billion and $1.4 billion in financial year 2023.

Coles share price snapshot

The Coles share price has been outperforming lately.

The stock has gained 11% since the start of 2023. It's also trading 9% higher than it was this time last year.

For comparison, the ASX 200 has gained 6% year to date and 2% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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