On Thursday morning WM Morrison Supermarkets Plc (LON:MRW) released its preliminary results for the year ending January 31st 2016.

After completing two years of its three year turnaround plan the company’s CEO David Potts said “by improving the shopping trip for customers, we have started the journey to turnaround the business and make our supermarkets strong”. He said their listening programme is “informing and shaping” the six priorities that the business is using to drive improvements that their consumers are beginning to notice.

The company saw like for like sales drop by 2.0% excluding VAT and fuel whilst like for like sales improved in the second half of the year, up by 0.1% despite deflation of over 3%. Deflation pushed down turnover by 4.1% to £16.1 billion compared to £16.8 billion in 2014.

Morrisons earned a profit before tax of £217 million compared to a loss of £785 million in 2014 which alongside property disposal proceeds helped contribute to net debt being reduced by £594 to £1,746 million. £1.6 billion in free cash flow has now been generated over two years which it stated was ahead of initial expectations.

Commenting on the results, Chairman Andrew Higginson said:

“I am delighted that the reshaping of the Board and Executive Committee is now complete. The Morrisons team now comprises a wealth of internal and external talent with the experience to deliver the turnaround.

“The Board is pleased to be announcing that future dividends will be covered around two times by earnings per share, which is a policy that aligns shareholder returns with the long-term performance of the Company.”

Looking forward into 2016/17, Morrisons said it expects to realise the remaining £1 billion in its three-year cost savings target. The retailer was upbeat with its expectations to exceed its three-year targets for £600 million operating working capital improvement and £1 billion property disposal proceeds.

Also it was noted that free cash flow was to be at least £300m better than originally forecast, with operating working capital improvement at least £800m (up from £600m previously), and property disposal proceeds at least £1.1 billion (up from £1 billion).

The board said it acknowledges the importance of sustainable dividends to investors and in the next year it will be paying a dividend covered around two times by underlying earnings per share.