Retail conglomerate Wesfarmers lifted net profit after tax to $1.08 billion in the first half of FY19, a 10.4 per cent increase based on continuing operations.
A further $3.4 billion in post-tax profit, related to its demerger from Coles and disposal of a 40 per cent interest in Bengalla mine, Kmart Tyre and Auto Services and Quadrant Energy, can be added to the figure for a total NPAT of $4.5 billion attributable to Wesfarmers shareholders.
The Coles demerger led to a $2.2 billion net gain after income tax for the group, contributing significantly to the higher NPAT figure.
The group posted $14.38 billion in revenue in the half, up 4.2 per cent on the previous corresponding period.
Wesfarmers managing director Rob Scott noted that the last six months were marked by significant change and a repositioning of its portfolio.
The group’s remaining retail portfolio, which includes Bunnings, Officeworks, Kmart and Target, delivered mixed results.
Bunnings
Bunnings Australia and New Zealand saw revenue grow 5.2 per cent over the half to $6.8 million, while earnings before interest and tax rose 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,” Scott said in a statement to shareholders.
“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.”
Kmart
The Kmart Group, which includes the group’s two department store offerings Kmart and Target, saw a slight, 0.8 per cent bump in revenue to $4.6 billion, while EBIT fell 3.8 per cent to $383 million, compared to $398 million at the half year of FY17.
“Kmart’s earnings declined compared to the prior corresponding period primarily due to weaker sales in apparel, lower growth in non-seasonal products and increased store and supply chain expenses,” Scott said in a statement.
Target delivered earnings growth through improved trading margins and improved sales mix and annualised cost savings initiatives which came into effect during the half.
Officeworks
Officeworks increased revenue 8.2 per cent to $1.1 billion, which drove an 11.8 per cent increase in EBIT to $76 million over the half.
According to Scott, the higher earnings growth was achieved through a combination of strong sales growth, improved sales density, and and effective management of the company’s gross margin and cost of doing business.
Wesfarmers noted that despite the increased pressure put on the modern-day consumer by cost of living and decline in housing conditions, it will continue to invest in its retail channel moving forward.
While the group did not put forward solid expectations for the second half, it said it expects the balance sheet to remain strong, and to continue to take advantage of growth opportunities as they arise.
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