Retail conglomerate Wesfarmers has defended its record profits amid a cost-of-living crunch as its chair accused political leaders of failing to acknowledge the value big companies have on the economy.
Wesfarmers, which owns Kmart, Bunnings Warehouse, Officeworks and Priceline, announced a record $2.6 billion return after posting a $3.6 billion profit before tax.
Its chair Michael Chaney said companies like his were essential to the nation’s economic prosperity amid a cost-of-living squeeze, adding “almost all the profits ended up outside the company”.
It pumped 29 per cent of its profits before tax into the government’s coffers, with a majority 61 per cent going to shareholders, leaving the conglomerate with about 10 per cent.
Mr Chaney clapped back at Canberra for changes to employment law, payroll taxes and proposed environmental laws. (AAP: Richard Wainwright)
“For some external parties, profit seems to be a dirty word, but it is important to understand how profitable businesses are essential to our economy and future prosperity,” Mr Chaney told the Wesfarmers annual gathering on Thursday.
He took a swipe at Canberra for changes to employment law, payroll taxes and proposed environmental laws.
Opposition Leader Peter Dutton in July accused retail giants, including Bunnings, of repeated price gouging and proposed a coalition policy to break up major chains.
“It would be good to hear political leaders of all persuasions acknowledge their understanding of these facts — that large companies like ours constitute a vital part of the economy, generate enormous benefits to the community and make a huge contribution to society,” Mr Chaney said.
“Such an understanding would, I believe, lessen the chance of governments enacting laws that … work against the national productivity improvements that Australia so urgently needs.
“It is only through a prosperous, vibrant, growing sector that Australia is going to be able to provide that sort of support to our children and grandchildren that we have, in the past, taken for granted.”
Shareholders rewarded the board, rubber-stamping every remuneration vote as the company recorded a 3.7 per cent boost in profits to generate over $44 billion in revenue.
Kmart records a 25 per cent boost in profits
Elevated inflation and interest rates continue to squeeze households, Wesfarmers chief executive Rob Scott said, but the company’s “low price position” in their retail businesses was resonating with customers.
Wesfarmers managing director Rob Scott says Bunnings remained resilient against a weakening construction sector.
Department store chain Kmart was a stand-out performer, recording a 25 per cent boost in profits, despite the number of items placed in baskets decreasing.
Amid a weakening residential construction industry, sales at hardware store Bunnings continue to remain resilient, Mr Scott said.
“It takes longer to get approvals for projects and the volume of complexity of regulation is increasing in all aspects of business,” he told shareholders.
“In this environment, it is riskier and than ever to invest. This is most obvious for anyone trying to renovate or build a house.”
Ahead of the looming federal election, the retail conglomerate boss signalled a need for constructive debate and a commitment to ease red tape for businesses if governments want the prosperity to continue.
AAP
