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Earnings season wrap-up: 14 February

Nicholas Grove/Christine St Anne  |  14 Feb 2013Text size  Decrease  Increase  |  

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Nicholas Grove is a Morningstar journalist and Christine St Anne is Morningstar's online editor.


Companies covered in this report:

• Wesfarmers (WES)

• Mirvac Group (MGR)

• GPT Group (GPT)

• Dexus Property Group (DXS)


Wesfarmers' profit up 9.3pc, dividend up 10pc

Wesfarmers (WES) on Thursday announced a 9.3 per cent year-on-year rise in net profit for the half year ended 31 December 2012 to $1.285 billion.

Wesfarmers said strong retail earnings growth during the half in Coles, Bunnings and Kmart, together with a turnaround in the Insurance division, more than offset reduced earnings in Target and the Resources division.

Excluding one-off items in the prior period, net profit rose 6.8 per cent for the half. Earnings per share (EPS) for the half rose 9.2 per cent to $1.11.

Revenue from ordinary activities for the period rose 3.2 per cent to $30.6 billion, the company said.

The diversified conglomerate also declared a half-year dividend of 77 cents a share fully franked, up 10 per cent from 70 cents a share in the same half in the previous year. The dividend is payable on 28 March 2013.

Operating cash flow for the period rose 1.6 per cent to $2.2 billion, the company said in a statement.

Morningstar senior consumer, tech and telecom analyst, Tim Montague-Jones, said while the result was in line with his forecasts, it was nonetheless impressive given the difficult environment.

"The standout feature of the result was the strong 25 per cent increase in earnings before interest and tax (EBIT) from the Kmart division," he said.

"In a time of retail frugality, Kmart's is hitting the nail on the head by offering high-quality, everyday items for families at the lowest price."

Montague-Jones said the other notable performer was the Insurance division, which increased EBIT from $17 million in the prior period last year to $104 million.

"This reflects the dissipation of last year's liabilities associated with the Christchurch earthquake and high crop claims, while this year benefited from an increase in premiums and lower comparable claims," he said.

"As expected, the weak areas were Resource division, hit by falls in commodity prices and the stronger Australian dollar, and the Target division, which continues to incur costs associated with transformational plans."

On a divisional basis, Coles delivered earnings growth of 15.1 per cent to $755 million, while return on capital for the division increased by 100 basis points to 9.2 per cent.

Bunnings recorded a 6.8 per cent year-on-year rise in earnings to $518 million, with sales increasing across all key product categories and trading regions, Wesfarmers said.