* H1 profit 105 mln stg vs 167 mln stg
* Q2 like-for-like sales down 3.7%
* Maintains full-year guidance
* Warns retail price inflation is coming
* Bids for Morrisons heading for auction process
(Adds detail)
By James Davey
LONDON, Sept 9 (Reuters) - British supermarket group
Morrisons, at the centre of a bid battle between two
U.S. private equity firms, on Thursday reported a 37.1% fall in
first-half profit, hurt by COVID-19 costs and lost profit in
cafes, fuel and food-to-go areas.
The group, which trails market leader Tesco,
Sainsbury's and Asda in annual revenue, maintained its
full-year guidance but warned of some industry-wide retail price
inflation during the second half, driven by sustained commodity
price increases and freight inflation, and the current shortage
of HGV drivers.
In a results statement that looks likely to be Bradford,
northern England-based Morrisons' last as a publicly listed
company, it reported profit before tax and exceptional items of
105 million pounds ($144.5 million) in the six months to Aug. 1,
down from 167 million pounds in the same period last year.
Morrisons, which trades from 497 stores and has a staff of
over 110,000, said direct COVID-19 costs were 41 million pounds,
while 80 million pounds of profit was lost in cafés, fuel and
food-to-go areas because of the pandemic.
Total revenue including fuel was up 3.7% to 9.05 billion
pounds, with like-for-like sales excluding fuel and VAT sales
tax down 0.3%.
Like-for-like sales were down 3.7% in the second quarter,
having risen 2.7% in the first quarter.
The slowdown reflects the easing of pandemic restrictions on
hospitality, shifting demand away from the eat at home market.
"The whole Morrisons team has shown commendable resilience
facing into a variety of continuing challenges during the first
half, including the ongoing pandemic, disruption at some of our
partner suppliers, and the impact on our supply chain of HGV
driver shortages," said Chairman Andrew Higginson.
Morrisons maintained its guidance for the full 2021-22 year,
for profit before tax and exceptionals including business rates
paid to be above the 431 million pounds made in 2020-21,
excluding 230 million pounds of waived rates relief.
Last month Morrisons, which started out as an egg and butter
merchant in 1899, agreed a 7 billion pound offer from Clayton,
Dubilier & Rice (CD&R), which has former Tesco boss Terry Leahy
as a senior adviser.
However a rival consortium led by Softbank-owned
Fortress Investment Group could still trump CD&R's bid for the
group and the battle looks to be heading for an auction process
overseen by the Takeover Panel, which governs M&A deals in the
UK.
CD&R's latest offer is worth 285 pence per Morrisons share -
a 60% premium to Morrisons' share price before takeover interest
emerged in mid-June. Fortress' last offer was pitched at 272
pence a share.
Morrisons shares closed Wednesday at 292.4 pence, indicating
investors are hoping for a higher bid.
($1 = 0.7267 pounds)
(Reporting by James Davey; Editing by Kate Holton and Jan
Harvey)