Wesfarmers profit boost

Bunnings leads way but Target, Kmart struggle

WESFARMERS’ full-year profit has more than quadrupled to $5.51 billion, including post-tax gains of $3.17 billion on the demerger of Coles and other divestments during the year.

Net profit from continuing operations rose 13.5 per cent to $1.94 billion, with the conglomerate’s Bunnings, Officeworks and chemicals divisions driving a 4.3 per cent increase in revenue from continuing operations to $27.9 billion.

Statutory revenue for the 12 months to June 30 dropped by 36 per cent to $44.7 billion – reflecting the spin-off of Coles in November and the sales of Bengalla, Kmart Tyre and Auto Service, and Quadrant Energy.

Wesfarmers chairman Michael Chaney and managing director Rob Scott (pictured) told shareholders they were pleased with the company’s strong results during a year of portfolio renewal.

“Given the diversity and resilience of the group’s portfolio, it remains well placed for a range of economic conditions,” the pair said in a release.

The Kmart Group weighed on Wesfarmers’ result as the company had expected, with earnings down 13.7 per cent to $540 million.

Wesfarmers said Target’s results in particular highlighted the need for “ongoing repositioning” of the business.

Target’s total sales fell by 1.5 per cent following ongoing store rationalisation and lower sales in lifestyle, entertainment and beauty, with comparable sales down 0.8 per cent.

Total sales at Kmart were up 1.5 per cent but comparable sales were flat, with the womenswear result particularly poor and the brand’s planned exit from DVDs also weighing.

Bunnings, however, appeared to have weathered the worst of what Wesfarmers said were “subdued economic conditions”, with total sales at the hardware giant up 5.0 per cent to $13.2 billion.

Earnings increased 8.1 per cent to $1.63 billion on samestore sales growth of 3.9 per cent, with 17 new locations opened during the year.

Bunnings, which accounts for 57 per cent of Wesfarmers’ earnings, remains “well positioned for continued growth in FY20” despite an expected continuation of moderated trading conditions.

Mr Scott and Mr Chaney said Wesfarmers would also continue to pursue growth opportunities both inside and outside its current stable.

Wesfarmers will pay a fully franked final dividend of 78 cents per share, down from $1.20 a year ago, bringing the full-year dividend to $2.78, up from $2.23 in FY18.