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Sainsbury (J) PLC SBRY
Q2 2013 Earnings Call Transcript

Transcript Call Date 11/14/2012

David Tyler - Chairman: Good morning everybody, good morning. Thank you for turning and welcome to Sainsbury's Interim Results Presentation for the six months to the 29th of September 2012. I am going to say very little this morning. The numbers do the talking and John and Justin as normal will take you through them.

I have to say I am pleased; the Sainsbury business is firing on all cylinders at present. The management team indeed all our 150,000 colleagues deserve our plaudits for achieving this success in what are tough market conditions.

What is the success based on? I always point when asked this question to three different areas. First we have a clear vision, to be the most trusted retailer where people love to work and shop.

Our values are key to achieving this underpinning our customer relationships and motivating our colleagues. Secondly we aim to be farsighted and invest in what we expect to be growth areas in the future. Our hard work for example in online and in convenience is benefitting us today as you'll see in the figures.

Thirdly we aim to improve our return on capital employed by carrying out a wide range of actions designed to improve the customer offer and design to reduce our cost levels. This consistent approach across these three areas is paying dividends for shareholders. Our chase of the market has gone up; our profits are up and most importantly all this is being done while we continue to invest in the business through the profit and loss with the objective of future outperformance in the future.

So that's all I'm going to say about where we are positioned. I'm going to hand over to John to take us through the numbers. John?

John Rogers - CFO: Thank you, David, and good morning everyone. So, straight into the financial highlights of the first half; sales of GBP13.4 billion, up 4% year-on-year; delivering an operating profit of GBP412 million, up 4%; taking account of finance costs of GBP59 million; and profits from our joint ventures of GBP20 million, a good uptake year-on-year there; delivered a profit before tax of GBP373 million, up 5.4%.

That delivers basic earnings per share of GBP0.0152, up 9.4%, and of course that growth rate is boosted by the lower tax rate in line with what we guided to, again reflecting the lower corporate tax rate year-on-year. An interim dividend of GBP0.048 per share, again as mechanical calculation of 30% in last year's full dividend. Profits outside of underlying of GBP32 million, and I'll come on later to explain those a little bit more detail or delivering a profit before tax of GBP405 million. These results represented a very good set of figures both in terms of the sales growth and also the profit growth and what is clearly a very challenging retail environment.

So, moving on now to that sales growth, like-for-like as we've already reported of 1.7%, and of course that includes a 0.8% contribution from extensions, a little bit lower than the 2% that we guided to at the prelims reflecting the tough retail environment, but again well ahead of the market about 2 percentage points ahead of the market which is broadly flat. Sales of new space of 2.4%, a little bit better than that we guided to the 2% again reflected some good performance coming through in the new investment stores that we're making and adding those things together of course, with an overall growth in our sales of 4.1%, pretty much bang in line with where we guided to at the prelims.

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