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Wesfarmers has quashed speculation it is driving rationalisation talks in
the $2 billion fertiliser industry after being repeatedly touted as a
prospective buyer of WMC's Hi-Fert distribution business.
Wesfarmers managing director Michael Chaney yesterday dismissed suggestions
rationalisation of the sector was imminent when unveiling a $281.3 million net
profit for the nine months to March 31 a 61 per cent jump on the previous year.
He agreed that the WMC demerger could be a trigger for rationalisation but
added talks between the major parties including Wesfarmers CSBP, the Orica-owned
Incitec, Pivot and WMC had ``been on the go for years" and were no closer to
fruition.
``It is a matter of watch this space, eventually something will happen over
the next two years," he said.
Mr Chaney said Wesfarmers was positioned for a fresh acquisition after
bedding down the takeover of the Howard Smith hardware business. ``It really
depends on what comes up and whether the numbers add up."
He said yesterday the company was on track to produce a full year net profit
of more than $379 million as previously announced.
The solid result, which translated to a March quarter result of $101 million
of after-tax earnings on revenue of $1.77 billion in line with expectations
went unheralded by the market.
Instead, Wesfarmers shares crashed 88c, or 3 per cent, to an intra-day low
of $29.20 before closing 68c lower at $29.40. One analyst said its practice of
under-promising and over-delivering meant the company was now expected to exceed
its forecasts.
Wesfarmers' Bunnings hardware business posted a 122 per cent rise in
operating revenue to $2.3 billion with earnings at $188.6 million, up from
$106.5 million. Wesfarmers said the integration of Bunnings and Howard Smith's
BBC/Hardwarehouse businesses had progressed substantially, with the Australian
operation now running on a single core information system.
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