Wesfarmers a winner

Wesfarmers has bettered its forecasts by reporting a record $414 million annual profit, a rise of 65 per cent. Shareholders will get a fully franked dividend of 77 cents a share, payable on September 26th.

CEO Michael Chaney was upbeat about the result, saying that the company “got more things going right than going wrong”, while analysts are already upgrading their profit forecasts for this year.

Although the result was underpinned by the acquisition of Howard Smith, it also reflected growth in all of Wesfarmers' business divisions – hardware, farm products, fertilisers and energy. The hardware businesses, led by Bunnings, more than doubled their EBIT to $297 million, with revenue growing to $3 billion. Group revenue growth rose by 68 per cent to $7.4 billion.

Mr Chaney was circumspect about future acquisitions, but analysts claim that the cashed-up group could spend up to $1 billion. Mr Chaney admitted that the company's growth may be “complemented by acquisitions”, with fertilisers being an area of opportunity. Wesfarmers has been holding talks with rivals Pivot, Orica and WMC.

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