Coles Group Ltd.

Excluding significant items, Coles reported group sales revenue of $23.6 billion, up 2.5% year on year. Group EBITDA was $2.2 billion, up 7.8%, group EBIT was $1.2 billion, up 10.2%, and NPAT increased 12.5%. Supermarkets sales revenue increased 3.6%, or 6.1% excluding competitive industrial action and tobacco, with EBIT up 14.6% and EBIT margin up 55 basis points to 5.8%; gross profit margin increased 65 basis points, including a 37 basis point benefit from lower tobacco sales. Liquor sales revenue declined 3.2%, and the business cited $13 million in one-off costs tied to Simply Liquorland conversions. For the first 7 weeks of Q3, supermarket revenue increased 3.7%, or 5.3% excluding tobacco. Management reiterated full-year capex of approximately $1.2 billion and said it still expects cash realization of 100% for the full year.

Leah Weckert framed the half as another strong result in a competitive environment and repeatedly tied performance to Coles’ operating flywheel of better execution, stronger sales, and reinvestment. She highlighted value, availability, fresh food quality, e-commerce growth, and customer satisfaction as the key drivers, while also pointing to AI and automation as increasingly important enablers. Her tone was confident but pragmatic, with clear acknowledgement that there is still more work to do, especially in liquor and in continuing to improve customer metrics.

Sharbel Elias focused on the earnings conversion and balance sheet. He cited group revenue of $23.6 billion, EBITDA of $2.2 billion, EBIT of $1.2 billion, and NPAT up 12.5%, and said the board declared a fully franked interim dividend of $0.41 per share, up 10.8%. He also noted operating cash flow of $1.5 billion before interest and tax, a 69% cash realization ratio that would have been 94% after adjusting for an approximately $560 million timing impact, and said full-year cash realization should still be 100%. Gross profit margin expanded 65 bps in supermarkets, helped by annualized ADC benefits, strategic sourcing, SSI, Coles 360 and tobacco mix, while capex was $476 million in the half and full-year capex remains expected at about $1.2 billion. He said net debt timing effects should normalize in the second half and noted $1.9 billion of undrawn facilities plus strong credit ratings.

Analysts focused on the quality of the customer satisfaction gains, the sustainability of the stronger gross margin, the rise in cash costs, and the weakness in liquor. Management said the 330 bps improvement in customer satisfaction reflected a mix of stronger execution and benefits from ADCs, CFCs, renewals, fresher flows, better availability and sharper pricing, and emphasized that price satisfaction is usually the slowest metric to move. On liquor, Leah Weckert said the market is challenged by structural decline and cost-of-living pressure, warehouse stores are under the most competitive pressure, but the convenience network is growing and the Simply Liquorland reset is already lifting NPS. On gross margin and supplier support, management said they are investing in value while working collaboratively with suppliers, and Sharbel Elias stressed that Coles is using margin expansion to fund reinvestment rather than simply widening profit.