Wesfarmers Ltd. (ASX: WES) owns retail chains, operates mines, writes insurance, manufactures and distributes industrial products, manufactures fertilisers and chemicals, and distributes liquefied petroleum gas and medical and industrial gases.
Wesfarmers Ltd has announced its 1H FY19 results for the period ended 31 December 2018. As per the report the company has reported a net profit after tax (NPAT) of $4,538 Mn for the half year. The reported profit incorporates significant items of $3,059 million relating to discontinued operations, including gains on the demerger of Coles and disposals of Bengalla, KTAS, and Quadrant Energy which were comprehended during the stated period. The Net Profit After Tax (NPAT) from continuing activity increased by 10.4 per cent to come in at $1,080 million.
During the half year period, the company maintained the necessary capital disciplines and also retained a solid position statement. Net financial obligations at the end of the period were $324 million, a decrease of $3,256 million on the balance reported on 30 June 2018. This fall reflected the realisation from the portfolio management activity undertook and strong cash generation witnessed in the firm’s operating businesses.
In line with the Group’s dividend policy, the board has declared a fully-franked ordinary interim dividend of $1.00 per share. Besides, following the successful completion of many actions taken to reposition the Group’s portfolio, the directors have also declared a fully-franked special dividend of $1.00 per share, which will distribute $1,134 million to shareholders.
The Group has generated an operating cash flows of $1,987 million during the period, a decrease of 31.4 per cent on the prior corresponding period. This fall was predominantly on account of the demerger of Coles and disposals of Bengalla, KTAS and Quadrant Energy.
While the segmental cash generation remained strong, the Group’s cash realisation declined during the period, reflecting a number of one-off items, including the timing of the demerger of Coles, the timing of property disposals, a reduction in income tax payable of $91 million and the non-cash gain on the Group’s investment in Barminco.
As regards the outlook, the management expects that the company’s industrial businesses performance will continue to be subject to international commodity prices, exchange rates, competitive factors and other seasonal outcomes. The short-term outlook for the WesCEF business is positive; however, earnings over the medium term are expected to be adversely affected by an oversupply of explosive grade ammonium nitrate (EGAN) in the Western Australian market.
Following the capital management initiative announced by the management, the Group’s position statement is expected to remain strong, and also the company remains poised to take advantage of value-accretive growth opportunities.
Now, let us have a quick look at Wesfarmers Ltd’s stock performance and the return it has posted over the last few months. The stock is currently trading at a price of $34.97, trading up by 6.877% during the day’s trade with a market capitalisation of ~$37.1 Bn. The counter opened the day at $33.700, reached the day’s high of $35.250 and touched the day’s low of $33.700 with a daily volume of ~6,502,691. The stock has provided a Year Till Date return of 3.71% & also posted gains of -11.62%, 3.59% & -0.03% over the past six months, three & one-months period respectively. It had a 52-week high price of $ 37.694 and touched 52 weeks low of $ 28.786, with an average volume of 2,824,774 approximately.
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