Wesfarmers sells $1.1bn Coles stake

Wesfarmers has sold $1.1 billion of Coles shares, reducing its holdings of the supermarket chain to 10 per cent, while revealing $24 million of payroll problems during its half-yearly results released today.

Coles was spun-out of Wesfarmers in late 2018, with Wesfarmers retaining a 15 per cent slice.

The company will sell its shares at $16.08, generating proceeds of nearly $1.1 billion and registering a pre-tax profit of $160 million.

The company also flagged $9 million of payroll remediation costs at Target and $15 million at the industrial and safety division.

Bunnings had previously reportedly revealed a payroll error of $6.1 million.

That follows former stablemate Coles reporting a $20 million underpayment at its supermarkets and liquor division yesterday.

Wesfarmers reported a profit from continuing operations of $1.1 billion, up 4.4 per cent.

Revenue across the group was $15.2 billion.

Bunnings was the best performer in Wesfarmers’ portfolio, delivering a return on capital of 51.5 per cent.

Revenue was $7.3 billion, up 5 per cent, with net profit roughly unchanged at $932 million.

Western force

The chemicals, energy and fertilisers business gives a particular insight into a number of Western Australian industries.

Earnings were $174 million, down 5.9 per cent compared to the prior corresponding period.

Increased expenses here included for the ongoing management of lithium assets and exploration costs following the acquisition of Kidman Resources.

Little else was said on the company’s plans to build a lithium refinery in Kwinana and mine at Mount Holland, in which it acquired a 50 per cent stake through the Kidman deal.

A good performance in chemicals and fertilisers offset a decline in energy due to lower prices.

In the ammonium nitrate business, Wesfarmers reported robust demand for explosive grade products because of unplanned disruptions at the competing Yara Pilbara plant.

Demand from the iron ore industry was also strong as replacement mines came online and strip ratios rose.

But there were negatives here, with earnings falling as customers moved onto longer term contracts.

The sodium cyanide unit performed strongly, the company said, thanks to strong demand in the gold industry, which uses the chemical in processing.