Morrisons has suffered a drop in profits during its first half as it absorbed costs associated with weathering the coronavirus pandemic.

The supermarket giant posted a 28.2% decline in pre-tax profit to £145m in the half year to August 2, but said it incurred around £155m in costs relating to the pandemic. 

Morrisons’ total revenues during the six-month period slipped 1.1% to £8.7bn following a significant dip in demand for fuel as consumers stayed at home while lockdown regulations were in place.

Excluding fuel and VAT, like-for-like sales climbed 8.7% year on year.

Morrisons said the costs it incurred in order to adapt to the coronavirus crisis and the surge in online shopping were partly offset by £93m of business rates relief.

The grocer anticipates that any further costs associated with Covid-19 in 2020/21 will be “broadly offset” by further business rates savings.

Morrisons has worked to expand its online and home delivery capacity during the crisis. It has expanded its store pick model and its relationship with Amazon, and also launched food boxes, doorstep delivery and its partnership with Deliveroo.

The grocer hired more than 45,000 new and temporary workers over the period to keep up with demand.

Morrisons has also stepped up its wholesale arm, with “Morrisons on Amazon” same-day delivery due to become available in the second half. 

It also expects to supply the remaining 240 McColl’s stores during the second half, as it continues to roll out the agreement it penned back in 2017.

Morrisons boss David Potts said: “From the start of the pandemic we stepped up and put the company’s assets at the disposal of the country to help feed the nation. 

“Morrisons is at the heart of local communities and responded quickly when it mattered most, and we are very grateful for the British public’s appreciation of all the vital work our colleagues are doing. I believe we are seeing the renaissance of British supermarkets.  

“We are now looking forward to holding on to what we created in the first half, building on our colleagues’ inspiration and innovation, and sustaining the momentum of a broader, stronger Morrisons. I’d like to again thank every Morrisons colleague for their incredible efforts: you’ve earned your key worker status several times over.”

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