Morrisons profits plummet as ‘unprecedented’ inflation hits food manufacturing

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Morrisons profits more than halved as the grocer bemoaned “unprecedented inflationary pressures” on its vertically-integrated food manufacturing.

Morrisons sign against blue sky

For the 13 weeks ending July 31, 2022, the grocer reported adjusted EBITDA of £177m, down from £356m in the third quarter the previous year.

Morrisons said this drop in profits reflected “a number of temporary and transitional factors – some of which are expected to reverse in Q4 – and our year-end change”.

It also flagged the impact of inflation on its food manufacturing arm.

“As a food maker we feel the effects of inflation earlier than other retailers,” Morrisons said. “But conversely [we] are able to recover more quickly when inflation falls.”

Group revenue was up 4.5% to £4.79bn. Like-for-like sales excluding fuel did improve from the previous quarter but were still down 3.1% on the previous year.

Morrisons chief executive David Potts said: “It’s clear that the cost-of-living crisis is starting to change customer shopping patterns in many ways.

“The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing and the energy price guarantee will ease pressure on consumers.

“We are doing everything we can to keep prices down for customers. Last quarter, we introduced one of our biggest ever price-cut campaigns and in Q3 we introduced our popular Summer Collector scheme.

“Earlier this week, we announced another significant price-cut programme across 150 of our most popular products, and tomorrow we are launching a timely fuel promotion – with 5p a litre off with a £40 spend in-store – to help customers with the high cost of motoring.

“Importantly, we are adjusting and adapting, with ongoing investment in our customer proposition including exciting plans for McColl’s which we’re confident will continue to grow our convenience offering and footprint.

“We are also improving our digital capabilities and investing strongly in our My Morrisons card and app, helping us to incentivise and reward our customers in a more personalised and targeted way.

“I want to thank all Morrisons colleagues for their continued hard work and dedication to helping our customers through an exceptionally difficult period for UK consumers.

“They continue to be a beacon of compassion and consideration – and the affection and appreciation that our customers have for their work is evident every day.”