The group told investors that profits before tax and exceptional costs slid by 50.7 per cent to £201m for the year to the end of January.
It said it was impacted by higher-than-expected pandemic costs after a recent increase in absences, as well as the £230m impact of handing its business rates relief back to the Treasury.
Group like-for-like sales, excluding fuel and VAT, jumped by 8.6 per cent as it was buoyed by strong grocery demand, with 9 per cent growth in a strong final quarter. Online sales tripled during the year as its capacity jumped five-fold.
It said online and wholesale operations are both profitable and it expects these to continue to improve.
The company expects to post higher profits for the new financial year and has seen “strong trading” since it began in February.
Chief executive David Potts said: “Morrisons key workers have played a vital role for all our stakeholders during the pandemic, especially the most vulnerable in British society, and their achievements over the last year have been remarkable.
“I am delighted that we are recognising their enormous contribution by becoming the first supermarket to pay a minimum of £10 an hour to all store colleagues.”
He also said the group would extend its 10 per cent discount scheme for NHS workers until the end of the year.
Chairman Andrew Higginson said: “This has been a year where Morrisons’ resilience has been severely tested and I could not be more proud of the way the whole business has met that test.
“As we look forward to brighter times ahead, Morrisons is developing into a stronger, better business with deeper and closer relationships with our customers and the communities we serve.”
Potts added: “I’m pleased with the greater recognition, warmth and affection for the Morrisons brand from all corners of the nation, following a year like no other.
“We must now look forward with hope towards better times for all, and we’re confident we can take our strong momentum into the new year, targeting profit growth and significantly lower net debt during 2021-22.”
A final dividend of 5.11p per share was declared, taking the full-year ordinary dividend up 5.6 per cent to 7.15p and the full-year total payout up 27.1 per cent to 11.15p.
Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said: “Morrisons’ ego was already bruised after being relegated from the FTSE blue chip league in the latest reshuffle and these latest results underline just how tough the year has been for the grocer.
“However, amid the Covid gloom there are bright spots with signs Morrisons is laying the groundwork to take advantage of opportunities ahead, as it eyes the easing of restrictions.”
John Moore, senior investment manager at Brewin Dolphin, noted: “This time last year many people expected supermarkets to be among the businesses that emerged from Covid-19 stronger – even as ‘winners’ – but today’s results from Morrisons underline the complexities that challenged this view.”