Reporting Season: Wesfarmers Ltd (WES.ASX)

Reporting Season, Stocks Aug 20, 2020 / Reading Time: 2 mins
By Aditya Kapdi Reading Time: 2 mins

Overall, WES beat expectations, with dividend coming in significantly higher than expected as they are paying a $0.77 final dividend along with a $0.18 special dividend from the sale of its 10% interest in Coles in March. However, they noted in their outlook that the gradual removal of government stimulus will have a negative impact on them, as well as continued pressure on Kmart and Target. Higher operating costs are also expected. Its industrial segment is also expected to be impacted by weaker energy prices and lower margins in explosive grade ammonium nitrate.

 

https://maqro.com.au/download/34828/

 

Key Metrics:

 Rev 20 ($m)Rev 19 ($m)%
Bunnings14,99613,16214%
Kmart9,1528,5407%
OfficeWorks2,7752,30520%
Total30,84627,92010%

Outlook:

The continued impact of COVID-19 continues to cause significant uncertainty for the Group’s businesses. Consumers spending more time at home is likely to increase demand for some of the Group’s businesses but this will be offset by lower retail sales and the gradual removal of government stimulus will also have a negative impact.

Kmart and Target have been especially impacted though Bunnings and Officeworks have continued to deliver strong growth at a national level. Additional operating costs are expected as WES’s businesses make their stores safe for customers and employees.

WES has a strong balance sheet and is well-positioned regardless of economic conditions.

The Groups’ industrial businesses will be subject to commodity prices, FOREX rates and seasonal outcomes. Demand is expected to be robust but earnings are expected to be impacted by weaker energy prices and lower margins in explosive grade ammonium nitrate.

WES will continue to develop and enhance its portfolio to build on its unique capabilities and platforms to take advantage of growth opportunities.