SYDNEY – Australian conglomerate Wesfarmers Ltd., which owns everything from grocery stores to coal mines, said Thursday that annual net profit rose 606%, reflecting write-downs in the previous year from its Target retail chain and coal mines.
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But earnings at its key grocery unit Coles fell 13.5%.
Wesfarmers said net profit was $2.9 billion Australian dollars (US$2.3 billion) for the year through June. Excluding the write-downs, however, net profit rose a more modest 28%. Total revenue, meanwhile, rose nearly 4% to A$68.4 billion.
The Perth-based company declared a final dividend of A$1.20 Australian cents, compared to 95 cents in the prior period.
"The results achieved during the year demonstrated the strength of the group's conglomerate structure, as well as our focus on cash generation and capital efficiency," said Managing Director Richard Goyder.
Wesfarmers said it was generally optimistic about the current fiscal year, though it warned sales and margin pressures at Coles are expected to continue. Despite the earnings drop, food and liquor sales in the recently concluded fiscal year rose 2% and comparable food and liquor sales rose 1%.
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Wesfarmers said the outlook for its Bunnings home-improvement unit in Australia and New Zealand was particularly positive, though trading could be challenging in the U.K. and Ireland as Wesfarmers rolls out the Bunnings brand there. In department stores, it said Kmart would continue to drive growth while Target progresses a transformation plan.
Wesfarmers warned obligations to electricity provider Stanwell Corp. would negatively impact results in its resources business in the current fiscal year, and that coal prices are expected to remain volatile. Wesfarmers previously launched a strategic review of the resources business, but said Thursday there is no certainty the review will result in a sale or other transaction.
Investors were watching to see how Coles fared, given that many analysts have said it is losing ground to chief competitor Woolworths Ltd. There is also some concern that its discount department chains Kmart and Target could be in store for increased competition when e-commerce giant Amazon.com Inc. expands in Australia as early as next year.
Wesfarmers also recently accelerated the roll out of the Bunnings brand in the U.K. and Ireland, and decided recently that it wouldn't be pursuing an initial public offering of its Officeworks chain.
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(END) Dow Jones Newswires
August 16, 2017 19:56 ET (23:56 GMT)