Woolworths profit rises 5.1%, ACCC loses Metcash takeover case: Midday Roundup

Supermarket giant Woolworths has posed a 5.1% increase in full year net profit to $2.1 billion, with revenue also up by 4.9% to $54.5 billion. The result was just under market expectations.

“Woolworths is well positioned in all its market segments and has a strong and sustainable business model geared towards the less discretionary retail segments,” the company said in a statement today.

The business also confirmed profit growth for the year ahead of between 2-6%, although it warned that the next 12 months will be a “tough year for retailing”, with the “toughest conditions in this current economic cycle”.

“Therefore, it remains very difficult to predict accurately the outlook for fiscal 2012. However, we anticipate trading over the year will be subdued.”

Chief executive Michael Luscombe said the result was “sound”, and also praised the company’s upcoming hardware chain, Master’s.

“We believe Masters will deliver unparalleled service, unbeatable value and innovative ranging for DIY and trade customers and will inject much needed competition into the circa $40 billion home improvement sector,” Woolworths said.

Shares higher after strong US lead

The Australian sharemarket has risen over 1% higher this morning after a strong lead from the United States, where manufacturing data eased fears that a double-dip recession could occur.

The benchmark S&P/ASX200 index was up 39 points or 0.96% to 4207.4 at 12.10 AEST, while the Australian dollar also remained stable at $US1.05c.

AMP shares rose 2.14% to $4.29, while Commonwealth Bank shares rose 1.01% to $47.18. Westpac rose 1.17% to $19.95, as ANZ rose 0.91% to $19.87.

In the US, the Dow Jones Industrial Average rose 1.29% to 11,320.71.

Virgin Australia falls to a loss

Virgin Australia has recorded a loss of $67.8 million, a decline of 418% from the previous corresponding period.

“There are early indications of improving earnings in financial year 2012, with positive trading results in July and continued strengthening in the government and corporate markets,” chief executive John Borghetti said in a statement.

“We are confident we have the right strategy to manage our response to changes in future market conditions and to ensure a stable and successful future for Virgin Australia.”

The loss comes as the airline industry continues to suffer, with Qantas announcing a major restructure last week including the axing of about 1,000 jobs.

ACCC loses Metcash takeover case

Metcash will acquire Franklins in a $215 million deal after the Federal Court dismissed a case brought by the Australian Competition and Consumer Commission.

The regulator argued that the deal will stifle competition, and that Metcash would have an effective monopoly for independent supermarkets in New South Wales.

However, an initial summary of the judgement shows Justice Emmett believes the takeover would actually help independent retailers compete with larger supermarkets.

In a statement, the ACCC said the decision was disappointing.

“The Australian Competition and Consumer Commission is disappointed by today’s Federal Court decision on Metcash Trading Limited’s proposed acquisition of the Franklins supermarket business,” chairman Rod Sims said.

“The role of the ACCC is to oppose mergers where we believe there will be a substantial lessening of competition in a market in Australia, and this will not change.”