Wm. Morrison Supermarkets plc Dives After £176m Loss

Wm. Morrison Supermarkets Plc (LON: MRW) extends its slide but still increases dividend.

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The share price of Morrisons (LSE: MRW) (NASDAQOTH: MRWSY.US) fell by 8% to 215p during early trade this morning, after the UK’s fourth largest supermarket posted a loss of £176m this year, after posting profits of £870m the year before.

This is due to a £903m write down of assets including Kiddicare, the baby products retailer, which the grocer will attempt to sell this year due to poor performance. The shares have fallen by 18% so far in 2014.

morrisonsIn response, Morrisons announced it would sell £1bn of its freehold property over the next three years, in a move widely predicted by analysts. The firm has a property portfolio worth around £9bn — which has been a point of issue for activist investors, who believe it represents untapped value for shareholders.

Morrisons warned that underlying profits will fall by more than half to around £325-£375m next year.

The chief executive, Dalton Philips, commented:

“In trading terms this has been a disappointing year for Morrisons, with consumer confidence and market conditions continuing to be challenging. It has however been a period of significant strategic progress as we lay the foundations for a stronger future. Our financial position remains strong.”

“The review of our business undertaken by the Board, underpins our confidence in Morrisons strategic direction and the long-term prospects of the business. This is reflected in an increased dividend for the year ended 2 February 2014, in line with our previous commitment and consistent with our progressive dividend policy.”

Morrisons hiked the dividend by 10% to 13p, which is supported by earnings of 25p per share, giving a coverage ratio of 1.9.

The grocer committed to minimum dividend increase of 5% next year, meaning that after this morning’s price movement, the shares offers a projected income of 6.5%, while trading on a P/E of 9.

Of course, the decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the grocery sector — remains solely your decision.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark does not own shares in Morrisons. The Motley Fool has recommended shares in Morrisons.

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