News: WOW UPDATE 1-Woolworths profit rises on strong demand for essentials

(Adds details on results)

Aug 25 (Reuters) - Australia's largest supermarket chain Woolworths Group (WOW) posted a 0.7% rise in annual profit on Thursday, as a jump in sales of essential goods helped offset pandemic-related expenses.

Lockdowns through the course of the year and mandatory staff isolations have blown up expenses for Woolworths and its smaller rival Coles Group (COL) , while bad weather and floods have wiped out crops and blocked roads, increasing wholesale costs.

Demand rose during the second half of the year, with annual sales from continuing operations, excluding one-off costs, increasing 9.2% to A$60.85 billion.

Rising prices have benefited retailers as the cost-of-living squeeze forces shoppers to cut discretionary spending in favour of essential goods such as groceries.

The company posted annual net profit after tax from continuing operations, excluding items, of A$1.51 billion ($1.04 billion), compared with A$1.50 billion a year ago.

On Wednesday, smaller rival Coles posted a jump in annual profit to top analyst estimates as it reined in spending amid surging inflation, but warned of persistent cost pressure.

($1 = 1.4478 Australian dollars)