Wesfarmers looks forward to $2.1bn gain from Coles demerger
In November, the supermarket giant was spunoff from Wesfarmers following a shareholder vote and has been trading as an independent company on the ASX since November 21.
In a statement released today, Wesfarmers said that it expects to gain between $670 million to $680 million from the sale of its stake in the Bengalla coal mine, while its divestment of Kmart Tyre and Auto (KTAS) is expected to net $265 million to $275 million. The disposal of its interest in Quadrant Energy is expected to add US$98 million.
Boosted by these recent divestments, the retail conglomerate is expecting to post earnings before interest and tax of between $385 million and $400 million at its half year results on February 21.
“Following the receipt of proceeds from these transactions, the Group’s balance sheet is in a strong position, with net financial debt reducing from $3.6 billion at 30 June 2018 to an unaudited net debt position of approximately $0.3 billion at 31 December 2018,” the company said in a statement.
Wesfarmers revealed that comparable sales in Targets stores rose by 0.5 per cent on the previous corresponding period, while Kmart posted a comparable store sales decline of 0.6 per cent (excluding the gain on the sale of KTAS).
Kmart sales growth was impacted by the planned exit of the low margin DVD category and weaker sales in apparel categories.
Managing director Rob Scott credited Wesfarmers’ diverse portfolio of businesses and interests for the company’s strong performance overall.
“All of our businesses continue to deliver a compelling offer to their customers and Wesfarmers enters the new calendar year with a strong balance sheet and operating businesses well positioned for the future,” Scott said.
This story originally ran on sister-site Inside FMCG.
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