Wesfarmers Ltd (ASX: WES) reported its result for the half year to 31 December 2017.
Wesfarmers is the conglomerate that runs Coles, Bunnings, Kmart, Officeworks and Target Australia.
Here are some of the highlights, compared to last year:
- Revenue increased by 2.8% to $35.9 billion
- Day to day trading, or EBITDA, down 42.5% to $1.76 billion (What the heck is EBITDA?)
- Profit down 86.6% to $212 million
- Profit excluding significant items down 2.7% to $1.54 billion
- Dividend maintained at $1.03 per share
Wesfarmers broke the individual performances down into their ‘EBIT’, which is similar to EBITDA, results. Bunnings Australia & New Zealand grew profit by 12.2% to $864 million. Bunnings UK & Ireland’s loss increased by 244% to $165 million. Coles’ profit declined by 14.1% to $790 million. Kmart & Target’s profit increased by 7.2% to $415 million and Officeworks’ profit increased by 9.7% to $68 million.
The main detractors from the Wesfarmers profit result was the writedowns it took on Bunnings UK & Ireland and on Target. The company did this to reflect the difficult trading conditions and moderated earnings. The Homebase/Bunnings UK&Ireland writedown was for a total of $931 million and the Target writedown was for $306 million.
Bunnings ANZ delivered revenue growth of 10.2% and same store sale growth of 9%. The business will work on accelerating its digital capability, more in-store activities and even deeper community engagement and support.
The company did not announce anything regarding closing Bunnings UK & Ireland, after there had been speculation in the media that it may do so.
Coles suffered from a ‘relatively high level of price deflation in the half’, which was mainly the fresh food section. However, it did point to units per basket growth and customer satisfaction improvements. Management expect further price deflation in the near future.
Kmart sales grew by 8.6% and Target sales fell by 6.5%. Kmart benefited from continued investment in price which resulted in higher customer transactions & units per basket. Target has further reset the products, price and range to better suit customers’ needs.
Wesfarmers Managing Director Rob Scott said that the continued strong momentum in Bunnings Australia and New Zealand, Kmart and Officeworks, in a competitive retail environment, was a highlight for the half.
He also commented on the dividend “In line with the Group’s dividend policy, which considers earnings, cash flows, franking credits and credit metrics, the directors have declared an interim dividend of $1.03 per share, in line with the previous corresponding period“.
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