On 3 December 2018, Wesfarmers Limited (ASX: WES) informed that it has completed the sale of its 40% interest in the Bengalla Joint Venture to its joint venture partner New Hope Corporation for a total consideration of $860 Mn. The agreement to sell the interest in Bengalla was disclosed on 7 August 2018, and from this sale, the company is expecting to earn a pre-tax profit on the sale of $670 Mn to $680 Mn in the Group’s 2019 half-year financial results, subject to finalization of completion accounts.
According to Wesfarmers Managing Director Mr. Rob Scott, the sale of the Bengalla interest completes the divestment of the coal businesses from the company’s portfolio, and the disciplined and patient review of these businesses resulted in outcomes for the company’s shareholders which reflect the value of these world-class assets.
Earlier in the month of November, the company completed the sale of its 13.2% interest in Quadrant Energy Holdings Pty Ltd to Santos Limited for a total consideration of circa US$170 million. From this sale, Wesfarmers is expecting to earn a pre-tax profit on the sale of around US$98 million in the Group’s 2019 half-year financial results, subject to completion adjustments. In the month of November, the company also completed the sale of its Kmart Tyre and Auto Service (KTAS) business to Continental AG for a total consideration of $350 million. From this sale, the company is expecting to record a pre-tax profit on the sale of approximately $270 Mn in the Group’s 2019 half-year financial results.
Recently, the company also successfully demerged the Coles group after which the Coles group successfully started trading on ASX as a separate entity. The demerger of Coles will allow Wesfarmers to reaffirm its position as a diversified conglomerate and it will also allow Wesfarmers to reallocate capital towards higher growth opportunities.
In FY 2018, the company reported a net profit after tax (NPAT) of $1,197 Mn which includes a loss from discontinued operations of $1,407 Mn. The company reported an operating cash flows of $4,080 Mn in FY 2018 which were 3.5% less than FY 2017, mainly due to higher tax payments during FY18. The company incurred a gross capital expenditure of $1,815 Mn which was $134 million higher than FY 2017. The increase in capital expenditure mainly due to the increase in BANZ store openings relative to the last year and the acquisition of the Kmart brand name in Australia and New Zealand for $100 Mn. The capital expenditure was partially offset by lower capital expenditure in Coles. Further, the earnings per share of the company were 245.1 cents and the return on equity was 11.7 percent in FY 2018.
Meanwhile, in the last six months, the share price of Wesfarmers decreased by 2.33 percent as on 3 December 2018. The company’s shares traded at $31.135 (-1.813% intraday) with a market capitalization of circa $35.95 billion as on 4 December 2018 (AEST 3:14 PM).
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