Wesfarmers profit up 33% in first half as Coles earnings jump: Economy roundup

Wesfarmers announced a 33% increase in profit to $1.17 billion for the first half of the year, but says trading conditions are expected to remain challenging in the short term.

Managing director Richard Goyder said the company had turned around its retail businesses and growth in customer numbers was testament to improvements in store quality and value.

“Despite an expectation of continuing consumer caution and competitive market conditions in retail the overall group outlook for the remainder of the 2011 financial year remains encouraging,” he says.

“Initiatives are well underway across our businesses to continue to strengthen and differentiate our retail offerings and there is a positive outlook for the resource sector, including near term metallurgical coal prices, which will benefit our industrial businesses.”

Coles EBIT increased by 18.3% to $575 million compared to the previous corresponding period, Bunnings earnings grew 8.3% and Kmart earnings grew by 13%.

Earnings for retail divisions increased by 5.6% to $1.4 billion, with Target recording a 26.2% drop in earnings compared to the same period last year.

The company said it was happy with the result given current price deflation and a strong Australian dollar.

Qantas net profit reaches $241 million

Qantas recorded an increase in net profit for the first half of the year to $241 million but the company says it was still in talks with Rolls-Royce regarding the explosion on an A380 aircraft last year.

“Qantas remains in discussions with Rolls-Royce in relation to the compensation for the economic loss incurred. No agreement has been reached at this stage,” the company says.

Net profit rose from $58 million from the previous corresponding period to $241 million with underlying pre-tax profit up 56% to $417 million.

Country Road profit up 4%

Fashion retail chain Country Road has increased its half-year profit by 4% but warned that trading conditions are still harsh.

The company said profit was $9.4 million, with revenue up 7.7% to $217.8 million.

Sales were up by 6.4% to $209.4 million and director Ian Moir said consumer spending was making conditions hard for the retail industry.

“Despite the difficult trading conditions a continued focus on reducing costs and strict inventory management enabled the business to improve overall profitability for the first half,” Moir says.

“The directors remain cautious about growth prospects in 2011 and will remain focused on cost and inventory management.”

Shares flat despite solid Wall Street gains

The Australian share market opened flat this morning after stocks on European and American markets rose due to solid financial data.

The benchmark S&P/ASX200 index was up 0.3 points or 0.19% to 4936.6 at 12.10 AEST while the Australian dollar rose higher to $US1.

AMP shares gained 0.73% to $5.49, Commonwealth Bank shares rose 0.15% to $53.92, ANZ lost 0.23% to $25.65 and Westpac lost 0.41% to $24.24.

NBN buys new spectrum

Austar has sold Spectrum to the National Broadband Network in order to deliver wireless services to rural areas.

The company said it will take $120 million from NBN Co, with the first wireless services to be delivered from 2012.

“Our network will be based on a suite of technologies aimed at providing the most cost effective rollout of services to meet the needs of Australians wherever they live or work, on a standardised, ubiquitous network,” NBN Co chief Mike Quigley says.

Austar group director of corporate development Deanne Weir said the pay-TV provider would not focus on taking it products to customers outside its existing base.

Fed confident on US recovery

The United States’ Federal Reserve says board members are confident of a recovery but the number of jobs needed to sustain growth is not appearing.

“Participants generally expressed greater confidence that the economic recovery would be sustained,” the Fed said in the minutes of its January meeting. 

“Overall, meeting participants continued to express disappointment in both the pace of and the unevenness of the improvements in labour markets.”

The Dow Jones Industrial Average gained 61.53 points or 0.5% to 12,288.17.