Wednesday 21st February 2018
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Wesfarmers' Australian and New Zealand Bunnings business lifted earnings 12 percent off the back of higher sales and wider margins in a bright spot that saw the ASX-listed conglomerate's first-half profit plunge 87 percent.
The Perth-based company's Bunnings Australia and New Zealand division increased earnings before interest and tax to A$864 million in the six months ended Dec. 31 from A$770 million a year earlier, on a 10 percent gain in sales to A$6.57 billion. Wesfarmers doesn't break out the New Zealand division, although both sides of the Tasman have been experiencing strong property markets which typically fuel demand for the building materials stores.
"BANZ achieved another very strong result during the half, underpinned by continued sales growth across all of its market segments, productivity initiatives and operating leverage," managing director Rob Scott said. The company said it expects good trading momentum to continue and expects to introduce online transactions for special orders in the second half.
The result included store-on-store sales growth of 9 percent. Bunnings, the dominant player in Australia, has 54 stores and trade centres in New Zealand and 309 in Australia. Eleven new stores were opened in the period while seven were closed.
The Australasian business was a bright point for the group, which slashed A$931 million from the value of its Bunnings UK and Ireland business and A$306 million from its Target division. Wesfarmers flagged the impairment charges earlier this month and today reported net profit of A$212 million in the six months to Dec. 31, down from A$1.58 billion a year earlier.
Operating revenue was up 2.8 percent to A$35.9 billion and it announced an interim dividend of A$1.03 per share, payable April 5 with a record date of Feb. 27.
Scott said the momentum in Bunnings Australia and New Zealand, Kmart and Officeworks in a competitive retail environment, was a highlight for the half.
The stock last traded at A$40.76 and has fallen around 8 percent so far this year.
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