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9 takeaways from the Wesfarmers Ltd AGM

This week shareholders had the opportunity to hear directly from the Chairman and Managing Director of one of Australia’s most prominent blue-chip companies, the $48 billion Wesfarmers Ltd (ASX: WES).

This year was particularly special for Wesfarmers as it marked 100 years since the original business was formed as a farmers co-operative in Western Australia.

Apart from an AGM being one of the few times that shareholders can call their board to account, it is also an important opportunity for the board and management to deliver to shareholders a review of the past 12 months and an outline of their growth strategy for the future. The AGM can also provide an update on trading since the full year results and possibly provide guidance for the current financial year.

Here are 9 important takeaways from Wesfarmers’ AGM –

  1. FY 2014 saw Wesfarmers grow revenue by 4.2%, while net profit after tax (excluding non-trading items) and earnings per share grew 6.1% and 6.8% respectively to $2.4 billion and $2.09.
  2. Going forward the group will not have earnings from its Insurance division or its investment in Air Liquide WA as these assets have been divested.
  3. The Chairman highlighted the pleasing turnaround in the Coles division since Wesfarmers acquired it in 2007. For FY 2014, Coles produced earnings growth of 9.1% to $1.7 billion.
  4. One of the few blemishes within the conglomerate’s portfolio was the Target business. Wesfarmers was forced to take a non-cash impairment charge against the assets and earnings fell 36.8% to $86 million.
  5. Another disappointment was the Coal division which had to endure significant falls in export coal prices which led to a 12.2% decline in earnings to $130 million.
  6. Since listing in 1984, Wesfarmers has delivered outstanding total returns to shareholders (TSR) with a compound annual rate of 21% – which is 89% more than All Ordinaries Index.
  7. The past decade has also seen outperformance with Wesfarmers’ TSR at 10% – which is 13% more than the rate of TSR achieved by the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
  8. A fully franked dividend of 25 cents per share has been declared and will be paid to shareholders 16 December.
  9. CEO Richard Goyder provided a general trading update for the first quarter in which he described sales across the retail portfolio as generally pleasing.

All-in-all Wesfarmers appears to be tracking reasonably well considering the headwinds it faces from the slowdown in the resource sector.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

 

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