Wesfarmers Post 1 percent Growth in First-half Profit

Wesfarmers (WES), an Australia based company that concentrates in the resource, retail, chemical and insurance business has posted a 1 percent first-half profit growth after the company’s Target divisions and Kmart went for offsetting $662 million fall in the earnings of its coal business. According to the Wesfarmers chief executive Richard Goyder, the result displayed a clear benefit of having a diversified business plan. The company posted a net profit of $879 million for the six months to the end of December where it recorded $871 million worth of net profit during the corresponding period a year earlier. Wesfarmers raised its dividend by as much as 10 percent to 55c while its stock gained 3.2 percent or 95 cents, hitting $30.60.

The result shows that Wesfarmers revenue gained 3.7 percent from its Coles Supermarket chain which is the largest operating division of the company. The earnings before interest and tax (EBIT) went up by 13 percent to $486 million. One of the most significant achievements for the company was that it managed to boost its sales by as much as 6 percent excluding the advantage of the opening of the new stores and in addition to this, it remained ahead of its close competitor Woolworths which posted a 4.8 percent comparable store sales growth during the first half. The Wesfarmers chief executive claimed that the company was no longer losing its market to rival Woolworths and was seeing a significant growth in volume. It is to be mentioned that Coles slashed shelf prices by 0.9 percent while the shelf prices of Woolworths went up by 1.6 percent.

Mr. Goyder also said that the supermarket division of Wesfarmers was at a very strong position as it was expected by the company. One of the most important parts of the result was the impressive performance of Target which recorded a 30 percent increase in EBIT on 4.2 percent of sales growth while Kmart posted a 105 percent surge in EBIT, although it saw a fall of 1 percent in sales.