Strong Half-Year Results For Wesfarmers

Wesfarmers Limited has reported a statutory net profit after tax (NPAT) of $1,390 million for the half-year ended 31 December 2020. NPAT from continuing operations, excluding significant items, increased 25.5 per cent to $1,414 million. 

Wesfarmers Managing Director Rob Scott said it was pleasing to have reported strong sales and earnings growth across the retail businesses, as well as an improvement in the performance of Industrial and Safety, during a period of continued disruption and uncertainty due to COVID-19.

“Bunnings, Kmart Group and Officeworks delivered strong trading results for the half, reflecting their ability to adapt to changing customer preferences and provide a safe environment for customers and team members. In line with Wesfarmers’ objective of delivering superior and sustainable long-term returns, the retail divisions continued to invest in building deeper customer relationships and trust by providing greater value, service and convenience for customers during a period in which many Australian households faced significant challenges and uncertainty. 

“The result in Chemicals, Energy and Fertilisers (WesCEF) reflected a solid operating performance, while Industrial and Safety reported an improvement in the performance of Blackwoods. 

“Pleasing progress on the Group’s data and digital agenda in recent years supported strong online sales growth and digital engagement during the half. Total online sales across the Group more than doubled for the half, excluding Catch. Including the Catch marketplace, online sales of $2.0 billion were recorded for the half.

“Good progress to accelerate the growth of Kmart and address the performance in Target continued during the half and, on a combined basis, Kmart and Target delivered a record earnings result for the period. Sales and transaction volume uplifts from Target stores that have been converted to Kmart stores continue to be very encouraging, and 19 stores were converted during the half. Target’s profitability improved significantly, supported by strong demand and the ongoing simplification of the business.

“The Group maintained its commitment to sustainable long-term value creation during the half. Across the Group, Scope 1 and 2 emissions reduced by eight per cent. Wesfarmers also employed approximately 9,500 more team members at the end of December 2020 compared with the prior corresponding period, reflecting continued investment in customer service and digital capabilities across the Group, as well as increased levels of activity in the retail businesses. Aboriginal and Torres Strait Islander team member numbers increased by 800, continuing the Group’s progress towards achieving employment parity of three per cent by 2022.”

Operating cash flows increased 4.0 per cent for the half to $2,216 million, supported by strong divisional earnings growth, which was partially offset by the ongoing normalisation in working capital positions in the retail businesses following the abnormal balances recorded at the end of the 2020 financial year, as well as the timing of tax payments. 

Wesfarmers has maintained a strong balance sheet as a result of the solid cash flow performance and the actions taken in the 2020 financial year in response to the uncertainty associated with COVID-19. The Group reported a net cash position of $871 million at the end of the half.

The directors have determined to pay a fully-franked ordinary interim dividend of $0.88 per share, reflecting the strong NPAT result and Wesfarmers’ dividend policy, which takes into account available franking credits, balance sheet position, credit metrics and cash flow generation while preserving the flexibility to manage continued uncertainty associated with COVID-19, and to take advantage of value-accretive growth opportunities, if and when they arise.

Bunnings

Revenue for Bunnings increased 24.4 per cent to $9,054 million for the half, with earnings increasing 35.8 per cent to $1,274 million. Excluding the net contribution from property, earnings increased 39.0 per cent.

Bunnings saw total store sales growth of 24.8 per cent and store-on-store sales growth of 27.7 per cent, with strong growth across all product categories and major trading regions and particularly strong growth in garden and outdoor living.

“The strength of the sales and earnings results reflects Bunnings’ solid execution of the strategic agenda and the ability of the operating model to successfully adapt to changing customer behaviour and operating environments,” Mr Scott said.

“Bunnings continued to invest in the customer experience through its commitment to lowest prices, expansion of online product ranges and upgrades to in-store product displays across kitchen and garage organisation ranges. Travel restrictions and customers spending more time undertaking projects at home continued to support sales growth.” 

The half-year results briefing presentation with more details about the Group's performance and strategy is available here.

Source : Wesfarmers

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