- Statutory full year net profit after tax at Wesfarmers was down 58% to $1.197 billion.
- The result was hit by a loss of $1.407 billion from discontinued operations and $300 million in a writedowns.
- Profit from continuing operations, excluding a $300 million non-cash impairment in Target, increased 5.2% to $2.9 billion.
- Sales growth at supermarket chain Coles was just 1.1% for the full year on a comparable basis.
Wesfarmers posted an 58% fall in full year profit to $1.197 billion, after writedowns and losses from discontinued businesses.
Revenue from continuing operations was up 3% to $66.88 billion.
The reported profit includes a loss from discontinued operations of $1.407 billion, which reflects the trading results and significant items for Bunnings UK, which Wesfarmners has now sold.
Net profit after tax from continuing operations, excluding a $300 million non-cash impairment in Target, increased 5.2% to $2.9 billion.
The directors declared a fully franked final ordinary dividend of $1.20 a share, bringing the full year shareholder payout to a steady $2.23.
In early trade, Wesfarmers shares were 3% higher at $52.15.
Managing Director Rob Scott says the 2018 financial year was one of significant change to deliver sustainable growth.
“The three key priorities for the year were to address areas of underperformance, reposition the portfolio and drive opportunities for growth, with good progress made against each of these,” says Scott.
“The proposed demerger of Coles, and the divestments of Curragh and BUKI during the year, demonstrate a disciplined approach to capital allocation and portfolio management, and will reposition Wesfarmers for the next decade.”
Coles is still running behind competitor Woolworths in terms of growth.
Coles’ earnings fell 6.8% to $1.5 billion, with revenue broadly in line with the prior year.
Food and liquor recorded sales growth of 2.1%, with comparable sales growth of 1.1% for the year and 1.8% for the fourth quarter.
The last results available for Woolworths show a 4.7% increase in sales for the third quarter. Comparable sales rose by 4.4%
“Sales momentum in supermarkets steadily improved during the year, driven by growth in customer transactions, units sold and average basket size,” says Scott.
“Continued improvements in the customer offer delivered earnings growth of 3.0% in the second half of the financial year, although full-year earnings were below the prior year due to the annualisation of customer investments and the impact of one-off items in the first half.”
Bunnings earnings in Australia (BANZ) up 12.7% to $1.504 billion.
Total store sales increased 8.9%, driven by store-on-store sales growth of 7.8%.
“BANZ achieved another very strong result, underpinned by sustained sales momentum across all of its market segments, ongoing productivity initiatives and disciplined capital management,” says Scott.
“Further investments in customer value, the introduction of online transactional capability for special orders, deeper commercial engagement and continued merchandise innovation were highlights during the year.”
Earnings for the Department Stores division rose 21.5% to $660 million, representing record earnings, with both Kmart and Target achieving growth.
Revenue increased 3.6%, with continued strong growth in Kmart partially offset by lower revenue from Target.
A pre-tax, non-cash impairment of $306 million was recorded for Target, reflecting “difficult trading conditions” and a moderated outlook.
“Kmart invested significantly in the customer offer during the year, delivering greater value and enhanced product ranges,” says Scott.
“Continued strong execution resulted in double-digit growth in customer transactions and units sold, with earnings growth also driven by ongoing productivity initiatives and investments in the store network.”
“Target made good progress during the year, delivering positive earnings and strong cash generation through disciplined inventory management.
“While the ongoing reset of merchandise ranges was reflected in lower sales for the year, the online, menswear and homewares categories delivered sales growth, with overall sales momentum increasing through the second half of the year.”
Officeworks’ earnings were up 8.3% to $156 million. Revenue rose 9.1%.
“Officeworks’ strong performance continued during the year despite the ongoing competitive environment, as it continued to invest in price and merchandise ranges, and enhancements to the store environment and online,” says Scott.
“Return on capital improved 1.9 percentage points to 16.6% for the year, representing a 7.2 percentage point improvement since the 2014 financial year.”
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