Wesfarmers reports $4,538m profit for 2019 half-year results

Wesfarmers Limited has reported a net profit after tax (NPAT) of $4,538 million for the half-year ended December 31, 2018.

The reported profit includes post-tax significant items of $3,059 million relating to discontinued operations. These include gains on the demerger of Coles and disposal of Bengalla, Kmart Tyre and Auto Service (KTAS) and Quadrant Energy, completed during the half-year. According to Wesfarmers, NPAT from continuing operations rose 10.4 per cent to $1,080 million.

‘Significant change’

Wesfarmers Managing Director Rob Scott described the period as “one of significant change for the group”. He referred to several actions the group took to “reposition the portfolio”, including the “successful” demerger of Coles last November.

“Earnings before interest and tax excluding significant items derived from the group’s continuing operations increased by 9.5 per cent compared with the prior corresponding period,” Mr Scott said. “These were underpinned by continued growth in Bunnings, Officeworks and the Chemicals, Energy and Fertilisers (WesCEF) business.

“The group has made pleasing progress on its digital strategy, with the Advanced Analytics Centre in operation and formalisation of the flybuys joint venture during the period. The group’s retail businesses delivered further improvements in their respective ecommerce capabilities, with strong growth in online sales of 34 per cent for the half.

“Strict capital disciplines were maintained and the group retained a very strong balance sheet. Net financial debt at the end of the period was $324 million, a decrease of $3,256 million below the balance at June 30, 2018. This reflects the receipt of proceeds from portfolio management activity and ongoing strong cash generation in the group’s operating businesses.”

Paying dividends

Mr Scott went on to talk about the group acting “in line” with its dividend policy.

“The directors have declared a fully franked ordinary interim dividend of $1 per share,” he said.

“In addition … the directors have also declared a fully-franked special dividend of $1 per share. This will distribute $1,134 million to shareholders.

“This capital-management activity distributes to shareholders the profits realised on asset disposals. It also takes into account Wesfarmers’ available franking credits, strong balance sheet, robust credit metrics and cashflow generation – while preserving balance-sheet capacity to take advantage of value-accretive growth opportunities, if and when they arise.”