The Coles Group Ltd (ASX: COL) share price is charging higher on Tuesday.
In morning trade, the supermarket giant's shares are up 6% to $16.82.
This follows the release of its half-year results.
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Coles share price jumps on half-year update
- Sales revenue up 3.7% to $22,216 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) down 2.8% to $1,847 million
- Underlying EBITDA up 4.1% to $1,900 million
- Profit after tax down 8.4% to $589 million
- Fully franked interim dividend flat at 36 cents per share
What happened during the half?
For the six months ended 31 December, Coles reported a 3.7% lift in sales revenue to $22,216 million. This includes discontinued operations which made a contribution during the prior corresponding period.
On a continuing operations basis, Coles' sales were up 6.8% year on year. This reflects a 4.9% lift in supermarkets revenue, a 1.8% increase in liquor revenue, and $450 million of other revenue.
Coles' EBITDA margin softened during the half, leading to EBITDA rising 4.1% to $1,900 million on an underlying basis.
And on the bottom line, underlying profit after tax from continuing operations was down 0.3% to $626 million. Including discontinued operations, profit was down 8.4% to $589 million.
The good news is that the Coles board has focused on its underlying result when it comes to deciding on its dividend. A fully franked interim dividend of 36 cents per share was declared, which is flat on the prior corresponding period.
Management commentary
Coles' CEO, Leah Weckert, hit back at claims that the company is ripping off shoppers during the cost of living crisis. She said:
We understand the cost of living pressures that many of our customers face, such as higher rent, mortgage, energy, and other household bills. That's why we are working hard to deliver value to our customers every day. Over the last six months, we lowered the prices of hundreds of products through our "Great Value, Hands Down" campaign and we delivered additional value through a wide range of Exclusive to Coles products, weekly specials, and our Flybuys loyalty program.
We know that price matters to our customers, especially during the festive season. With this in mind, we worked with our suppliers to offer value in December, with quality Christmas products at a great price well received by our customers.
Outlook
Coles revealed that it has started the second half strongly.
During the first eight weeks of the third quarter, Supermarkets sales revenue grew by 4.9%, underpinned by volume growth from strong execution of its value campaigns and improvements in availability compared to this time last year.
Liquor sales revenue declined by 2.2% during the first eight weeks of the third quarter. This reflects lower discretionary spending.
The Coles share price is down 7% over the last 12 months.
