Bunnings triples annual profit in NZ as pickup in construction spurs demand
Bunnings, the hardware chain owned by Australian Wesfarmers, more than tripled annual profit in New Zealand, as a booming property market stoked demand for building products.
The New Zealand unit of the diversified Australian company reported profit of $4.9 million in the year ended June 30, from $1.1 million a year earlier, according to financial statements lodged with the Companies Office. Sales rose 15 percent to $813 million. Bunnings declined to comment on its annual report, pointing instead to parent Wesfarmers' group result.
The ASX-listed company generated A$10.12 billion in sales from its Bunnings and OfficeWorks units, which account for about 17 percent of group revenue, and said strong performances from Bunnings and its Coles supermarket unit drove up annual earnings. Wesfarmers generated about A$1.22 billion in total sales from its New Zealand businesses, which include Bunnings, and A$58.96 billion from Australia.
Group sales at Bunnings on both sides of the Tasman are up 11 percent to A$2.2 billion in the three months through September.
New Zealand is in the midst of a construction boom led by the rebuild in Canterbury and a heated housing market in Auckland. Rising real estate prices in Auckland means more people were opting to 'do-it-yourself' renovations rather than re-enter the housing market.
Last month, rival hardware chain Mitre 10 posted a 10 percent gain in sales to $1.04 billion in the year ended June 30, exceeding $1 billion for the first time. The chain increased its distributions to members by 11 percent to $58 million.
In August, listed construction and building products group Fletcher Building reported a lift in New Zealand distribution sales, which covers the PlaceMakers hardware stores and Mico Plumbing, by 2 percent to $1.17 billion and increased earnings by 21 percent to $51 million, after opening two PlaceMakers branches and reporting a pickup in volumes.
Competition in the construction sector has come under scrutiny with Fletcher being accused of having an effective monopoly in New Zealand, controlling both supply of building products and construction, which has been blamed for rising building costs and subsequently house prices.