Wesfarmers Reports Record Half-Year Profit

Wesfarmers has reported a net profit after tax of $4,538 million for the half-year ended 31 December 2018.

This record profit includes post-tax significant items of $3,059 million relating to discontinued operations, including gains on the demerger of Coles and disposals of Bengalla, Kmart Tyre and Auto Service, and Quadrant Energy which were completed during the half-year.

Net profit after tax from continuing operations increased 10.4 per cent to $1,080 million.

Wesfarmers retained a very strong balance sheet. Net financial debt at the end of the period was $324 million, a decrease of $3,256 million below the balance at 30 June 2018.

Directors have declared a fully-franked ordinary interim dividend of $1.00 per share.

In addition, following successful completion of actions taken to reposition the Group’s portfolio, directors have also declared a fully-franked special dividend of $1.00 per share, which will distribute $1,134 million to shareholders.

Managing Director Rob Scott said the period was one of significant change for the Group, with a number of actions taken to reposition the portfolio, including the successful demerger of Coles in November 2018.

“Earnings before interest and tax excluding significant items derived from the Group’s continuing operations increased by 9.5 per cent compared to the prior corresponding period, underpinned by continued growth in Bunnings, Officeworks and the Chemicals, Energy and Fertilisers (WesCEF) business.

“Pleasing progress has been made on the Group’s digital strategy, with the Advanced Analytics Centre in operation and formalisation of the flybuys joint venture during the period. The Group’s retail businesses delivered further improvements in their respective e-commerce capabilities with strong growth in online sales of 34 per cent for the half.

“Strict capital disciplines were maintained and the Group retained a very strong balance sheet. Net financial debt at the end of the period was $324 million, a decrease of $3,256 million below the balance at 30 June 2018, reflecting the receipt of proceeds from portfolio management activity and ongoing strong cash generation in the Group’s operating businesses.

“In line with the Group’s dividend policy, the directors have declared a fully-franked ordinary interim dividend of $1.00 per share. In addition, following the successful completion of a number of actions taken to reposition the Group’s portfolio, the directors have also declared a fully-franked special dividend of $1.00 per share, which will distribute $1,134 million to shareholders,” Mr Scott said. “This capital management activity distributes to shareholders the profits realised on asset disposals and takes into account Wesfarmers’ available franking credits, strong balance sheet, robust credit metrics and cash flow generation while preserving balance sheet capacity to take advantage of value-accretive growth opportunities, if and when they arise.

Bunnings Australia and New Zealand (BANZ)

Revenue for BANZ increased 5.2 per cent to $6,909 million for the half, with earnings increasing 7.9 per cent to $932 million.

“Earnings growth was achieved despite a moderation of trading conditions and high levels of growth in the prior corresponding period and was assisted by an ongoing focus on cost control and continued favourable commercial property market conditions resulting in further positive outcomes on property divestments,” Mr Scott said.

“During the period, improvements were made to the in-store and online customer experience, and the focus on long-term value creation was maintained through continued investment in price and data analytics, ongoing category expansion and refresh and further growth in the store network.”

Source : Insight DIY Team and Wesfarmers

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