Wesfarmers tips profit jump

Perth-based industrial conglomerate Wesfarmers Ltd revealed it expected annual revenue and profit for 2005-06 will significantly exceed the previous financial year, after reporting a half-yearly net profit increase of 37 per cent.

Wesfarmers also announced it was to sell the Australian Railroad Group for $1.3 billion.

In a strong first-half result for new chief executive officer Richard Goy-der, Wesfarmers said the $447.48 million for the six months ending December 31 had been boosted by its energy division, namely coal driven by higher export prices and increased production volumes.

The company reported operating revenue of $4.4 billion for the half year, up 10 per cent.

“The directors continue to expect that group revenue and profit for the full 2005-06 year will significantly exceed the results achieved last year,” Wesfarmers said in a statement.

The company declared a fully franked interim dividend of 65 cents per share, up from 53 cents per share.

Wesfarmers also said its hardware business, dominated by Bunnings hardware operation, was trading well. Retail sales growth and a modest improvement in trade performance was forecast for Bunnings, which has been under market scrutiny as the former growth powerhouse of the business.

Operating revenue for Bunnings increased by 3.8 per cent to $2.22 billion in the first half. Earnings before interest and tax (EBIT) of $220.9 million was 2 per cent below that of the corresponding period last year.

Bunnings expects to open up to nine new warehouse-style outlets in the second half of this financial year.

Wesfarmers’ energy division reported a 57.3 per cent jump in operating revenue to $814.4 million. EBIT was up 177 per cent to $343.2 million. The company said export coal would continue to benefit from high metallurgical coal prices and fur-ther growth in volumes were planned.

It has already settled prices for more than a third of coal from its Curragh mine.

Wesfarmers also revealed it had reached an agreement with its joint venture partners to sell rail group ARG to investment firm Babcock and Brown Ltd and Queensland Rail.