Incoming Wesfarmers managing director Rob Scott says losses for Bunnings UK and Ireland are expected to increase in the 2018 financial year as trading conditions remain challenging in the overseas market.
Speaking at the company’s AGM, where Richard Goyder wrapped up his 12 years as chief executive of Wesfarmers, describing the role as “demanding and relentless”, Scott said the establishment of Bunnings in the UK will take time and Wesfarmers will be “disciplined with how we invest further capital” in the market.
“Our focus is on strengthening the management team to support the transformation and instilling stronger execution across the business,” he said.
Scott said overall, the conglomerate remains positive in its outlook, possessing a mixture of world-class businesses and “businesses that are undergoing turnarounds where returns are not satisfactory.”
“For Bunnings Australia and New Zealand, the outlook is positive given the strength of its customer offer,” he said.
“In a very competitive environment, Coles remains focused on customers and delivering sustainable growth in earnings and returns over time. In the short term, margin pressures are expected to persist as investments in the customer offer are not expected to be fully offset by simplicity benefits.”
Across its department stores, Wesfarmers sees further growth ahead for Kmart while Target now represents “a much smaller part” of the division. “Target continues to implement its transformation plan to improve performance,” affirmed Scott.
“We live in a dynamic and competitive world where technology is changing the way consumers and businesses engage in commerce and consumption,” he said.
“The pace of change and disruption is accelerating, creating both risks and opportunities.
“Three areas that will be increasingly important to Wesfarmers are talent management, accelerating our digital and data capabilities, and being bold and entrepreneurial.”
Goyder told the company’s annual general meeting that joining Wesfarmers in 1993 was a dream come true for him and his wife Janine.
“We had just had our third child in Sydney, and Janine was keen to come back to Perth where there would be some family support,” he said.
“I said that we would only move back if I could find a job at a good company like Wesfarmers.”
Goyder said he has enjoyed all his roles at Wesfarmers, in particular his time running the group’s rural division, known then as Landmark.
He said Wesfarmers has been part of his life since he was a child growing up in Tambellup, in Western Australia’s south, when his parents bought 500 units in the company, then called Westralia Farmers’ Co-Operative.
“When Mum died last year, that initial investment of around $1,000 was worth $300,000,” he said.
Goyder took over as chairman of the AFL Commission in April, is on the board of Woodside Petroleum and joins the Qantas board on Friday.
Wesfarmers chairman Michael Chaney paid tribute to John Bennison who passed away at the age of 92, labelling him “one of the most significant figures in the history of Wesfarmers.”
“JB as his team called him, was a visionary leader who established the commercial foundation for the company which Wesfarmers has become,” he said.
“As our general manager from 1974 to 1984, the decade which led to the company’s public listing, his commercial skills, outstanding leadership and tenacity underpinned the transformation of Wesfarmers from a co-operative to a more broadly-based company with the financial and management capacity to grow.”
“John Bennison was the company’s fourth CEO; today we transition from our seventh to our eighth in 103 years. At the end of today’s meeting, Rob Scott will succeed Richard Goyder as group managing director and chief executive officer… Anthony Gianotti has succeeded Terry Bowen as group chief financial officer. The directors are pleased that, as has been the case historically, these critical appointments have been able to be made internally, with people who understand the company’s values and culture.”
Goyder also paid tribute to Bowen who retired last week and John Gillam for his “significant contribution” as managing director of Bunnings.