Coles and Woolworths are making hundreds of millions of dollars in profits, but some shoppers aren’t happy. (Source: Getty)
Woolworths and Coles have announced hundreds of millions of dollars in profits for the 2023-24 financial year. It’s great news for shareholders, but Australians across the country are not impressed.
Farmers and producers who supply the two major supermarkets with meat, dairy, fruit and vegetables are urging Coles and Woolies to come to the negotiating table to make things fairer for them. Jolyon Barnett, chairman of the National Farmers Federation Horticultural Council, told Yahoo Finance that making billions of dollars in profits during a cost of living crisis was not a good look.
“They’re saying to their fresh produce suppliers, ‘Sorry, we can’t afford to pay you what you’re worth. We need you to lower your price,’ while at the same time increasing their margins,” he said.
“Some of our producers haven’t seen a substantial increase in the price of their produce in over a decade.”
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Barnett said she had no problem with companies making a profit but it didn’t sit well with her given how the big supermarkets had treated producers.
“This is completely unacceptable,” he told Yahoo Finance.
“As a result, record numbers of farmers are closing shop, bulldozing their orchards and selling market gardens for housing, which means more and more of Australia’s fresh produce will be imported.”
Michael Cunial, a former farmer who left the cherry industry, told a Senate inquiry into Coles and Woolworths strategies that he had lost a lot of money on seven deliveries of produce to the supermarkets.
The story continues
In one example, an orange fruit grower expected to sell 15 tonnes of cherries for $90,000 but only got $5,800 on the second-hand market.
Cherry and apple farmer Guy Gaeta also told the inquiry it had been an extremely difficult time for growers.
Farmers Ian Pearce, Guy Gaeta and James McClymont attend a Senate inquiry into supermarket price fixing in Orange, in the central west of New South Wales. (Source: AAP)
“I’ve been working in Orange for 38 years and over the past 30 years I’ve seen around 200 farmers work every day, sell their crop and then leave with nothing,” he explained. “People don’t realise how ruthless the supermarkets are.
Barnett urges:
How much did Coles and Woolworths make?
Coles Group released its full-year financial results on Tuesday morning, showing full-year revenue increased 4.4% to $43.6 billion.
Total dividends paid to shareholders increased to $0.68 a share from 66 cents. After-tax profits rose 2.1 percent to $1.1 billion.
“We faced many challenges throughout the year, including changing customer behavior, increased external scrutiny and rising costs,” CEO Leah Weckert explained on the earnings call.
Woolies reported profits on Wednesday, which told a very different story.
Woolworths Group profits rose 3 percent but impairments at its New Zealand supermarkets reduced its bottom line and overall profit to just over $100 million. Woolworths saw sales rise 5.6 percent to $67.9 billion thanks to strength in its Australian supermarkets.
Before the $1.5 billion impairment in New Zealand, Woolworths’ net profit fell 0.6 percent to $1.7 billion.
Including the impairment of its New Zealand food business, reported net profit was $108 million.
This will take combined profits for Coles and Woolworths to $1.2 billion, or $2.8 billion excluding Woolworths’ New Zealand division.
‘Nasty’ or sustainable business: What Australians say
Australian shoppers flocked to social media to complain about the companies raking in the big bucks while they themselves struggle to put food on the table.
“It’s absolutely criminal that Coles Supermarkets reported a profit of $1.1 billion in the current economic climate,” one person said.
“The sight of all these little people struggling is so disturbing,” another user wrote.
But others have defended Coles and Woolworths, saying their figures show their profits are not that high compared to their sales.
“Before you get excited about Coles and Woolworths’ $3 billion profits, get your calculator out. That’s $111 per person per year in Australia. $111 per year doesn’t make much of an impact on cost of living issues,” one user commented.
“Given their sales of $42 billion, their profits are only 2.6%. For a company as big as Kohl’s, that’s not sustainable. Their profits need to be higher, but people also need to understand the level of sales involved,” added another.
CEOs defend supermarket giants’ interests
Woolworths responded to the furor in a media conference call, with outgoing CEO Brad Banducci saying he understood shoppers might not be happy that the company is making profits at a time like this.
“If our profits had gone to zero, the difference we could pass on to our customers in cost savings across the business would have been, as I recall, $5 a week for a supermarket shopping basket,” he said.
“I think we need to be realistic and realize that big numbers can be misleading.”
Mr Banducci added that Woolworths was always trying to strike the right balance between strong returns for shareholders and low prices for customers.
Coles CEO Leah Weckert said the supermarket was increasing its spending with suppliers.
“Looking back at the year, our cost of goods paid to suppliers was $34.7 billion, an increase of $2.4 billion from last year,” she said.
“So there’s no question that suppliers are paying more on their cost of goods every year by doing business with us.”
– NCA Newswire
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