Wesfarmers reported a 13.2% increase in first half earnings driven by a turnaround of its mining operations, but its previously stellar supermarket business has slumped.
Australia’s biggest private employer, which owns Coles, Bunnings, the Kmart and Target chains, as well as mines, said net profit in the six months ended December 31 climbed to $1.58 billion, up $190 million on a year earlier.
Today’s profit is in contrast to a second half loss last year, dragged down by writedowns at its Target stores and mining operations.
The surge in commodity prices is a timely boost for Wesfarmers, which is battling a resurgent Woolworths in its mainstay supermarkets business.
Profits at its industrial business, including the coal mining unit, soared to $377 million, a massive leap from $22 million a year earlier.
Coal prices soared more than 300% from lows struck in early 2016, fuelled by cuts to Chinese coal production and a rebound by the country’s steelmakers. However, coal prices have since tumbled more than 40% from the highs above $US300 a tonne struck late last year.
Meanwhile, Coles saw a 2.6% drop in profit to $920 million.
The decline in earnings was driven by lower margins at its supermarkets, Wesfarmers said, including absorbing wholesale price increases in meat.