Wesfarmers, Australia’s biggest private employer, posted a 83% fall in full year profit to $407 million, dragged down by impairments on Target stores and its coal assets.
Without the $1.84 billion in writedowns, profits still fell 7.7% to $2.25 billion on a 5.7% rise in revenue to $65.98 billion. The underlying profit was slightly below expectations of $2.3 billion.
The company cut full year dividends by 7% to 186 cents from 200 cents last year.
Managing director Richard Goyder says the strong performances across a majority of the group’s businesses were offset by challenging trading conditions and restructuring activities in Target and the impact of low commodity prices.
Excluding Target, the retail portfolio delivered growth in EBIT (earnings before interest and tax) of 7.5%.
“This growth was offset by weak underlying performance in Target, as well as the cost of restructuring activities following the creation of the department stores division in February 2016 to provide a stronger platform for future growth,” Goyder says.
Coles increased earnings by 4.3% to $1.86 billion and Bunnings by 11.6% to $1.214 billion.
Target reported an operating loss of $195 million, including $145 million of restructuring costs and provisions to reset the business. The non cash impairment for Target is $1.249 billion.
The writedown for Curragh, a coal mine west of Rockhampton in Queensland, is $850 million.
At Coles, food and liquor sales for the year were up 5.8% to $32.56 billion. Like-for-like sales were up 4.1%.
“The continued momentum in Coles’ Food and Liquor business was a good result given a competitive market and accelerating deflation during the year,” says Goyder.
Divisional results for 2016: