Wesfarmers (ASX:WES) post a $2.3b capital return after a stellar year

Company News

by Melissa Darmawan

Wesfarmers (ASX:WES) are rewarding their shareholders with a 17.1 per cent bump to their full-year dividend along with a surprise $2.3 billion proposed capital return at $2 per share.

The owner of Bunnings, Kmart, Target and Officeworks had a stellar year recording a profit of 16.2 per cent at $2.4 billion compared to the year before. While their earnings before interest and tax from continuing operations jumped 18.8 per cent at $3.7 billion.

The retail conglomerate reaped from the Covid-19 pandemic as people were cooped up at home. Bunnings banked a 19.7 per cent rise in earnings to $2.2 billion while the Kmart Group saw a stellar 69 per cent surge to $693 million. This was attributed by completing the planned changes to the Kmart and Target store networks during the year with results from the converted stores contributing more than expected. Meanwhile, Officeworks rose 7.6 per cent at $212 million while their industrial and safety division grew 79.5 per cent at $70 million. Their chemical business was the only division to post a decline in earnings, down 2.5 per cent.

However, the retail giant has already flagged that sales have slowed down for this financial year. Kmart and Target are 14.3 per cent lower, Officeworks is down 1.5 per cent while Bunnings has declined by 4.7 per cent from the same time last year. So far, they have seen solid growth from their commercial customers which have offset a decline in the retail side of their business. On a rosier note, sales growth has remained strong on a two-year basis at 24.4 per cent.   

To cap off the mammoth year, they will pay a final dividend of $0.90 cents per share set to be paid in October this year. Also, if the $2.3 billion capital return proposal receives the green light, shareholders could receive further payments in December.

On a different note, Wesfarmers also announced the retirement of Wayne Osborn. He joined the board 11 years ago as a non-executive director. To fill his shoes, Alan Cransberg joins the board as a non-executive director slated to start in October. Mr Cransberg brings 36 years experience working at Wall St listed aluminium giant, Alcoa.

Shares in Wesfarmers (ASX:WES) are trading 2.4 per cent lower at $62.41.

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