J Sainsbury PLC (LSE:SBRY) has posted a 26% rise in free cash flow and profits at the top end of expectations following a year of high inflation led by huge food price hikes.
Retail free cash flow climbed by 26.2% from £503mln to £635mln for the full year to March 4, 2023, driven by working capital reductions and dividends received from its banking wing, Sainsbury’s reported.
Dividends of £319mln equalling 13.1p per share were paid out for the year, funded by the higher free cash flow, the food retailer said.
Statutory revenue rose by 5.3% to £35,157mln, with the supermarket group also recording a 5% fall in underlying pre-tax profit to £690mln, though that was at the top end of expectations.
Retail underlying operating margin fell slightly to 2.99% from 3.40% last year, while retail sales climbed 5.2% and grocery sales rose 3%, owing to inflation, Sainsbury's said.
Looking ahead, the FTSE 100-listed retailer forecast underlying profit before tax to hit £640mln-£700mln in the coming financial year, alongside free cash flow of “at least” £500mln.
“While there is still much to be done and there is no doubt that the year ahead will remain challenging, I'm confident we will continue to deliver,” chief executive Simon Roberts said in the results statement.
Supermarkets have been in the spotlight in recent weeks as grocery price inflation slipped just 0.2% to 17.3% between March and April, according to Kantar, with rival Tesco's profits being dubbed “obscene” earlier this month.