Woolworths has lifted its profit 8.5 per cent and expects a moderate increase for the year ahead.
The company has also flagged plans to expand its Masters hardware chain in South Australia.
The retail giant made a net profit of $2.45 billion for the year to June 30, up from $2.259 billion the previous year.
Sales were up 3.9 per cent to $60.8 billion during the year, though the full year results were skewed slightly by the fact Woolworths reported a 53 week-year in 2012/13.
Excluding the impact of that extra week, sales were up 5.9 per cent while underlying net profit was up 6.1 per cent.
Woolworths warned it expected trading conditions to remain challenging in 2014/15 with cost-of-living pressures and economic uncertainty continuing to weigh on consumers.
It expects to lift its 2014/15 profit by between four and seven per cent.
Chief executive Grant O’Brien said the company lifted sales and earnings from its core supermarket division despite a slide in grocery prices.
“We have increased comparable sales and EBIT growth in Australian Food and Liquor over the past three years, gaining further momentum in FY14,” he said.
“In a highly competitive market with ongoing consumer uncertainty, we have increased market share whilst also delivering value to customers who have saved more than $750 million from key promotional campaigns throughout the year and benefited from deflation in average prices of 3.1 per cent for the year.
O’Brien said the company’s liquor retailing businesses, which include Dan Murphy’s, BWS and online seller The Wine Quarter, also recorded strong growth.
Earnings from Woolworths’ Australian Food, Liquor and Petrol division rose 7.2 per cent during the year on a normalised basis.
Woolworths said its intentions to expand in the Home Improvement market “remains as strong as ever”.
The company is pushing ahead with its chain of Masters stores as competition for the Wesfarmers-owned Bunnings chain.
“It is a $45 billion market, with 5 per cent annual growth and one significant retailer with approximately 17 per cent share
“The market is fragmented and is in the process of consolidation as demonstrated by the 42 per cent Masters sales growth in FY14.
“We opened 18 new Masters stores in FY14 taking the total to 49 at year end
“Our Masters’ pipeline is focused on key metropolitan areas where we do not have a significant presence such as New South Wales, Queensland and South Australia.”
Construction of the first two stores started in April this year – one at Adelaide Airport and the second at Parafied Airport.
Woolworths advertised last week for 150 staff.
Woolworths announced a fully-franked final dividend of 72 cents, up from 71 cents a year ago.
