Retail giant Wesfarmers has reported a 27.6 per cent jump in full-year profit, but revealed a slump from its earnings powerhouse, Coles.
The conglomerate said net profit after tax for the 12 months to June 30 was $2.87 billion, up from $2.25 billion a year earlier, excluding impairments recorded against Target and its coal assets in 2016.
Including those impairments, profit increased 605 per cent to $2.87 billion, from a $407 million profit the previous year.
Total revenue across its businesses, which include Coles, Bunnings, Kmart and Officeworks, hit $68.44 billion, up 3.7 per cent but slightly short of the analyst consensus of $68.76 billion.
Earnings before interest and tax at Coles fell $251 million to $1.6 billion, a 13 per cent drop.
Same-stores supermarket sales growth slipped from 4.1 per cent to 1 per cent and total revenue fell 0.1 per cent.
However, price deflation, which has been hurting profits in recent years, slowed from 1.7 per cent to 0.8 per cent.
Fuel sales at Coles' service stations made up much of the earnings decline, falling 16 per per cent from 2016 on a comparable basis.
"In a very competitive environment, Coles invested in value, service, and better quality and availability in [fresh food], to deliver continued growth in sales," Wesfarmers chief executive Richard Goyder said in a statement.
He said this strategy would lead to sustainable growth over the long term.
Investors appeared pleased with the result, Wesfarmers' shares rising 2.5 per cent to $42.81 by 11.30am - their highest price since May.
Wesfarmers was buoyed by growth in its industrials division off the back of strengthened coal prices. Revenue from mining grew $738 million to $1.74 billion, and EBIT swung from a $310 million loss in 2016 to a $405 million profit.
Kmart continued to be a standout, growing earnings 17.7 per cent to $553 million off 7.5 per cent sales growth. But sister chain Target again ran into the red, reporting a $10 million loss compared to a $195 million loss a year earlier.
Sales at Bunnings in Australia grew 8.9 per cent, helping bump earnings 10 per cent to $1.3 billion. The home improvement chain's expansion into Britain and Ireland weighed on the division, running at a $89 million loss.
"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," Mr Goyder said.
More to come
