Wesfarmers Ltd (ASX: WES), the owner of retail businesses like Coles and Bunnings Warehouse among others, reported a 3% increase in revenue for 2018 with a net profit of $2.9 billion, up 5.2%.
Wesfarmers announced it will pay a final dividend of $1.20 per share, in-line with its final payment in 2017. That takes the full year dividends to $2.23 per share fully franked (click here to learn what fully franked means).
According to analysts surveyed by Bloomberg, Wesfarmers was forecast to post a $2.64 billion profit and pay full year dividends of $2.18 per share. Based on that, it would appear Wesfarmers achieved a better-than-expected result.
“The three key priorities for the year were to address areas of underperformance, reposition the portfolio and drive opportunities for growth, with good progress made against each of these,” CEO Rob Scott.
Fueling the return was a $170 million improvement from Bunnings Australia and New Zealand, as well as a better result from Wesfarmers’ Kmart and Target.
Coles Split
Following on from the announcement that it will demerge the Coles supermarkets division, Wesfarmers said it has made significant progress with its demerger plans and the split is likely to be completed in November 2018.
Coles reported a near 7% decrease in profit during the year despite a 1.1% increase in comparable stores sales.
“Continued improvements in the customer offer delivered earnings growth of 3.0 per cent in the second half of the financial year, although full-year earnings were below the prior year due to the annualisation of customer investments and the impact of one-off items in the first half,”
Mr Scott said.
Together with the recently announced sale of Kmart Tyre and Auto and the Curragh coal mine, Wesfarmers says it will be left with a flexible balance sheet to pursue sustainable growth opportunities.
Previously, analysts had opined that the demerger of Coles will give Wesfarmers up to $12 billion of access to new capital to pursue acquisitions.
Since February, shares of Wesfarmers have traded from a low of around $40.60 to over $50 today.
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