Anger grows as Woolworths and Coles declare $1.2 billion profit: ‘Criminal’

Woolworths and Coles have announced hundreds of millions of dollars in profits for the 2023-24 financial year. And while that's good news for shareholders, Australians across the country aren't impressed.

Farmers and growers who supply meat, dairy, fruit and vegetables to the two largest supermarkets are demanding that Coles and Woolies sit down at the negotiating table and create fairer conditions for them. Jolyon Burnett, chair of the National Farmers Federation's Horticulture Council, said: Yahoo Finance Billions in profits in the midst of a cost-of-living crisis is not a good picture.

“They're increasing their profit margin while at the same time going to their fresh produce suppliers and saying, 'We're sorry, we can't afford to pay you value… you have to lower your price,'” he said.

“Some of our producers have not seen a real increase in the prices they have paid for their products in over a decade.”

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Burnett said he had no problem with a company making a profit, but said it was not right considering how producers were treated by the major supermarkets.

“This is simply unbelievable,” he said Yahoo Finance.

“The result is that more and more of them are closing their shops, razing their orchards or selling their vegetable gardens to make way for housing… and that simply means that more and more fresh produce has to be imported from Australia.”

Former cherry farmer Michael Cunial, who has left the industry, told a Senate inquiry into the tactics of Coles and Woolworths that he lost a lot of money on seven deliveries of his products to the supermarkets.

The story continues

In one case, the orange fruit producer had expected $90,000 for 15 tons of cherries, but received only $5,800 on the B market.

Cherry and apple farmer Guy Gaeta also told the committee of inquiry that it was an incredibly difficult time for producers.

“I have been working in Orange for 38 years and over the last 30 years I have seen about 200 farmers left empty-handed, despite working every day and selling their crops,” he explained. “People don't understand how unscrupulous the supermarkets are.

Burnett demanded:

How much did Coles and Woolworths earn?

The Coles Group announced its annual results on Tuesday morning. Sales rose by 4.4 percent to 43.6 billion dollars over the course of the year.

The total dividend to shareholders rose from 66 cents per share to $0.68. Profit after taxes rose to $1.1 billion, an increase of 2.1 percent.

“There were a number of challenges throughout the year, including changing customer behavior, increased external control and cost inflation,” said Managing Director Leah Weckert, explaining the results.

Woolies announced its earnings on Wednesday and the story was completely different.

While Woolworths Group earnings rose 3 percent, the company's profit was reduced by impairments at its New Zealand supermarkets, leaving total profit just over $100 million. Woolworths reported a 5.6 percent increase in sales to $67.9 billion, thanks to its Australian supermarkets.

Before the $1.5 billion impairment charge in New Zealand, Woolworths' net profit fell 0.6 percent to $1.7 billion.

Reported net profit was $108 million, including the impairment of the New Zealand grocery business.

This brings the combined profit of Coles and Woolworths to $1.2 billion, or $2.8 billion if the New Zealand part of Woolworths is not included.

“Disgusting” or sustainable business: Australians speak out

Australian shoppers flocked to social media to vent their anger at the two companies raking in cash while they themselves are barely able to put food on the table.

“It's a bloody crime for Coles supermarket to report a $1.1 billion profit in the current economic climate,” one person said.

“Just disgusting while the little people are fighting,” wrote another.

Others defended Coles and Woolworths, saying their profit compared to their sales showed that they were not actually making that much money.

“Before you get excited about Coles and Woolworths' $3 billion profit, get out a calculator: that's $111 per person per year in Australia. $111 a year isn't going to make much of a difference to your cost of living problems,” one user commented.

“Given their $42 billion in revenue, they only made 2.6 percent profit… that's not a sustainable amount for a big company like Coles. Their profit should be higher but people also need to understand what revenue they're talking about,” another added.

CEOs defend profits of supermarket giants

Woolworths responded to the outrage in a conference call with the media, with outgoing CEO Brad Banducci saying he understood that customers may not be happy to see a company making a profit at a time like this.

“If we had started to stop making a profit, … the difference we would have made in cutting costs across our entire business and passed on to the customer would have been, as I recall, $5 a week in the supermarket basket,” he said.

“I think we just have to be realistic and realize that big numbers can be misleading.”

Banducci added that Woolworths always tries to find the right balance between good returns for shareholders and low prices for customers.

Coles CEO Leah Weckert said the supermarket's spending on suppliers had increased.

“When I look back at the entire year, we paid our suppliers $34.7 billion for the cost of their goods. That's an increase of $2.4 billion over the previous year,” she said.

“So when suppliers do business with us, they definitely get more for their cost of goods year after year.”

– with NCA Newswire

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