Wesfarmers Ltd.’s second-half profit rose 14 percent on record coal prices and its acquisition of Australia’s second-biggest retailer Coles Group Ltd.

Net income at Wesfarmers, whose businesses range from mining and insurance to supermarkets, climbed to A$449 million ($392 million) in the six months ended June from A$394 million a year earlier. Second-half figures were calculated by subtracting first-half earnings from the A$1.05 billion full-year profit the Perth-based company reported today.

Prices for coking coal, the fuel used by steelmakers, have tripled this year, helping Chief Executive Officer Richard Goyder boost earnings as he seeks to revive growth at the Coles supermarkets he bought last year for A$18.2 billion. Wesfarmers, which also has chemicals, engineering and insurance units, gets two-thirds of earnings from energy and retail.

“These results were achieved while a lot of effort was going into the initiatives to improve the operational and financial performance of the recently acquired Coles group of businesses,” Goyder said in the statement. “Results for the food and liquor business for the seven months reflect the fact that we are still in the early stages of a five-year turnaround.”

Annual earnings were expected to rise to A$1.15 billion, according to the average of 13 analyst estimates compiled by Bloomberg.

Retail Expansion

Wesfarmers shares fell 3.4 percent to A$33.40 at 12:41 p.m. in Sydney and have lost 18 percent this year. The stock has declined 27 percent from A$45.90 since announcing its bid for Coles in July 2007.

The takeover gave Goyder ownership of the Coles supermarket chain as well as the Officeworks office supply unit and the Target and Kmart discount department stores. The company already owned Bunnings, the nation’s largest home-improvement chain.

Second-half earnings before interest and tax from resources, which includes coal mines in three Australian states, surged 83 percent to A$311 million.

Coal prices have surged to a record this year as production has been curtailed by snowstorms in China, power cuts in South Africa and floods in Queensland state.

Supermarket earnings for the second half were A$344 million, with Wesfarmers not providing year earlier comparisons.

Ian McLeod, who took charge of the supermarkets, liquor and convenience stores in May, expects a turnaround to take five years at Coles, which lags behind Woolworths Ltd. in sales growth and profitability.

Kmart, Target

Kmart profit for the half was A$13 million; earnings at Target totaled A$105 million.

The home improvement and office supplies unit, which includes Bunnings and Officeworks, had a 14 percent increase in earnings to A$293 million.

Insurance earnings for the half rose 13 percent to A$68 million. Earnings at the Chemicals & Fertilizer division rose 4 percent to A$76 million.

The Industrial & Safety unit, which sells workplace equipment ranging from tools to clothing, had a 7.8 percent rise in earnings to A$69 million.

- source news : bloomberg -

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