Following write downs.
Wesfarmers profit has dropped 86.6% to $212 million, as a result of major write downs on its Bunnings UK and Target businesses. Earnings also took a major hit, falling 54.2% compared to the previous corresponding period.
Continued strong momentum in Bunnings Australia and New Zealand (BANZ), Kmart and Officeworks was a highlight for the half year ended 31 December 2017.
Bunnings
Revenue for BANZ increased 10.2% to $6.6 billion for the half, with earnings before interest and tax (EBIT) increasing 12.2% to $864 million.
Wesfarmers managing director, Rob Scott said, “BANZ achieved another very strong result during the half, underpinned by continued sales growth across all of its market segments. The solid momentum reflected continued strong execution of its strategy, with further investments made in customer value, product ranges, store network and digital.”
BUKI reported a loss before interest and tax of $165 million for the half, compared to a loss of $48 million in the previous corresponding period. Revenue for BUKI decreased 15.5% to $875 million.
“The loss for the half reflected continued trading and execution challenges as a result of the rapid repositioning of Homebase following the acquisition. The management team has been strengthened and a review is underway to identify the actions required to improve shareholder returns,” Scott said.
Pre-tax significant items of $931 million were recorded in the half, reflecting the current trading performance of Homebase and a moderated outlook for BUKI.
Kmart / Target
Revenue for the department stores division increased 3.2% to $4.8 billion, with continued strong growth in Kmart partially offset by lower sales in Target. Earnings increased 7.2% to $415 million, the highest level of combined Kmart and Target first half earnings since the 2010 financial year.
“Kmart invested significantly in the customer offer during the half, delivering greater value for customers and driving continued growth in volumes. Target stabilised its earnings through productivity initiatives and improved trading margins, while continuing to repositions its merchandise offer,” Scott said.
Pre-tax non-cash impairment of $306 million was recorded in Target during the half, reflecting difficult trading conditions in an increasingly competitive market and a moderated outlook for the business.
Officeworks
Officeworks’ revenue increased 9.7% to $1.01 billion, with earnings also increasing 9.7% to $68 million.
“Strong sales growth, coupled with effective cost control, delivered an increase in return on capital. Growth was driven by continued improvements in the core offer, complemented by new and expanded product ranges, improvements in layouts and store design, and further enhancement of the omnichannel offer,” Scott said.
Coles
Coles’ earnings decreased 14.1% to $790 million for the half, with revenue broadly in line with the prior corresponding period.
“Coles maintained good sales momentum during the half, with transaction growth accelerating in the second quarter and reaching the highest level of quarterly comparable transaction growth in six quarters. The business continued to improve its customer offer across value, quality, product innovation and service, resulting in overall improvements in customer satisfaction metrics,” Scott said.