Yahoo Finance Rage grows as Woolworths and Coles declare $1.2 billion profit: 'Criminal'
The two biggest supermarkets have revealed their revenue and profit for the latest financial year.
Woolworths and Coles have announced hundreds of millions of dollars in profit for the 2023-24 financial year. And while it's good news for shareholders, Aussies across the country aren't impressed.
Farmers and producers who stock the two biggest supermarkets with meat, dairy, fruit and vegetables are crying out for Coles and Woolies to come to the table and make it fairer for them. National Farmers Federation Horticulture Council chair Jolyon Burnett told Yahoo Finance billion-dollar profits in a cost-of-living crisis isn't a good look.
"For them to be increasing their margin at the very same time as they're going back to their fresh produce suppliers and saying, 'I'm sorry, we can't afford to pay you what it's worth... we need you to cut your price'," he said.
"Some of our growers have not seen a real increase in the price they paid for their produce in over a decade."
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Burnett said he doesn't have a problem with a company making a profit, but he explained it doesn't sit right considering how producers have been treated by the big supermarkets.
"It's just unconscionable," he told Yahoo Finance.
"The result is that we're seeing record numbers of them shut up shop, bulldoze their orchard, sell off their market garden for housing... and this just means that more and more of Australia's fresh produce will be imported."
Ex-cherry farmer Michael Cunial, who quit the industry, told a Senate inquiry into Coles and Woolworths' tactics that he had lost substantial money on seven deliveries of his produce to the supermarkets.
In one instance, the Orange fruit producer had expected $90,000 for 15 tonnes of cherries but received just $5,800 on the seconds market.
Cherry and apple farmer Guy Gaeta also told the inquiry it's been an incredibly difficult time for producers.
“I’ve been working in Orange for 38 years, and over the past 30 years I’ve seen about 200 farmers walk away with nothing, after working and selling their crops every day,” he explained. “People don’t understand how ruthless the supermarkets are.
Burnett has called for:
More transparency around how prices are set
A crackdown on supermarkets "manipulating" the volume of produce that they need
A change in produce specifications to ensure farmers don't have huge portions of their product rejected by the supermarkets
How much did Coles and Woolworths make?
Coles Group announced its annual financial results on Tuesday morning, showing revenue increased 4.4 per cent for the year to $43.6 billion.
Total dividends to shareholders increased from 66 cents per share to $0.68. After-tax profit has risen to $1.1 billion, up 2.1 per cent.
“There have been a number of challenges throughout the year, including changing customer behaviour, increased external scrutiny and cost inflation,” chief executive Leah Weckert explained in the results.
Woolies announced its profits on Wednesday and it was a very different story.
While Woolworths Group’s earnings have risen 3 per cent, the company's bottom line has been cut by impairments on its New Zealand supermarkets, leaving its overall profit at just over $100 million. Woolworths posted a 5.6 per cent rise in sales to $67.9 billion, on the back of its Australian supermarkets.
Before the $1.5 billion New Zealand impairment, Woolworths’ net profit fell 0.6 per cent to $1.7 billion.
Reported net profit was $108 million, including the impairment of the New Zealand Food business.
That takes the combined profit for Coles and Woolworths to $1.2 billion, or $2.8 billion if you don't include the New Zealand part of Woolworths.
'Disgusting' or sustainable business: Aussies weigh in
Aussie shoppers flocked to social media to vent about the two companies raking in the cash while they are barely able to put food on the table.
"Coles supermarket reporting a $1.1 billion dollar profit during our current financial economy is f**king criminal," said one person.
"Absolutely disgusting while the little people struggle," wrote another.
But others defended Coles and Woolworths by saying their profit compared to their revenue shows they're not really making that much money.
"Before you get excited about the $3b profit of Coles and Woolworths, get a calculator out: that's $111 per person per annum in Australia. $111 p.a. is not going to make much of a difference to your cost of living problems," commented one user.
"Considering their revenue was $42 billion, they only made 2.6 per cent profit.... it's not a sustainable amount for a large business like Coles. Their profit needs to be higher, but people also need to understand the level of revenue involved," added another.
CEOs defend supermarket giants' profits
Woolworths has responded to the outrage during a media call, with outgoing CEO Brad Banducci saying he understands shoppers might not be thrilled to see a company profiting during a time like this.
"If we’d have started to make zero profit... the difference that we would make in cost reductions in terms of our overall business and pass on to the customer, I think from memory was $5 a week in the supermarket basket," he said.
"I think we just need to be realistic that big numbers can deceive."
Banducci added that Woolworths is always trying to strike the right balance between getting good returns for shareholders and low prices for customers.
Coles CEO Leah Weckert said the supermarket's spend on suppliers is up.
"When I look back across the year, we paid to suppliers $34.7 billion in terms of what we paid them for their cost of goods, and that was an increase in $2.4 billion year on year," she said.
"So, suppliers are definitely getting paid more year on year for their cost of goods by doing business with us."
- with NCA Newswire
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