WESFARMERS' FY2018 A TALE OF TWO BUNNINGS

By NZHJ August 16, 2018 Industry news

Bunnings ANZ sees more good growth, but the failed BUKI venture removes more than a billion dollars from Wesfarmers' FY2018 bottom line.

Billed as a "year of significant change", yesterday's Wesfarmers FY2018 result (year to 30 June 2018) was again all about retail, with gains on the home front (Target apart) but losses overseas.

Operating revenue for Bunnings Australia & New Zealand (BANZ) was +8.9% to AU$12.5 billion for the year, with an EBIT +12.7% on the prior corresponding period at $AU1.5 billion.

The FY2018 BANZ EBIT Margin was 12% (up from 11.6% in the last FY) and its Return on Capital grew to 49.4%.

Total BANZ store sales were +8.9%, with a store-on-store sales +7.8% (up from +7.3% last FY).

(Note these numbers are for the Australasian business; Bunnings' New Zealand specific figures weren't publicly broken out this year.)

Bunnings Managing Director, Michael Schneider, says of the Bunnings result: “The strong performance is a result of solid execution against our strategic agenda to drive growth, create better experiences for customers and the wider community, as well as strengthen the core of the business.

"The result is a testament to the hard work of our team and the continued support from our suppliers.

“For the year ahead, our focus remains on offering an even wider range of products and services, further developing our digital capabilities, broadening commercial markets and delivering even more customer value.”

However, another item of interest in Wesfarmers' year-end result was the final tally on the cost of the former BUKI venture.

BUKI's final EBIT was negative AU$266 million, but the year-end numbers also detail additional significant items relating to BUKI including AU$1.0 billion of post-tax impairments, write-offs and store closure provisions against the BUKI business, and a post-tax loss on disposal of AU$300 million.

Such was the scale of the BUKI losses that it should be seen as the major contributor to Wesfarmers’ full-year net profit falling by a massive 58% to AU$1.2 billion.

Find all the WES FY2018 collateral on the ASX website here.

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