Wires

UPDATE 2-Australia's Wesfarmers HY profit up, reports more staff underpayment

Renju Jose

(Adds detail on staff underpayment, adds shares, analyst reaction)

SYDNEY, Feb 19 (Reuters) - Australia's Wesfarmers Ltd defied broader retail headwinds to post a 5.7% rise in first-half profit on Wednesday, helped by demand in its hardware retail business, sending its shares up 2% to a record high in early trade.

The conglomerate also revealed additional cases of underpayment of staff, on top of errors disclosed in October when it said about 6,000 staff were underpaid about A$15 million ($10.03 million) since 2010.

"Immediate steps are being taken to rectify identified issues, notify and repay affected team members, including interest, and ensure accuracy in the future through a robust program of auditing and monitoring," Managing Director Rob Scott said in a statement.

Several high-profile Australian companies have been embroiled in wages scandals, setting aside millions of dollars to repay affected employees.

Former Wesfarmers unit Coles Group Ltd disclosed on Tuesday it had underpaid some employees for more than six years, prompting the federal government to say they would introduce tougher laws that criminalise underpayment by companies and banning executives becoming company directors if they were involved in wage errors.

Excluding impact from a new accounting standard, Wesfarmers reported a net profit after tax from continuing operations of A$1.14 billion ($762.32 million) for the six months to December, compared with A$1.08 billion a year earlier.

Sluggish wage growth and tepid inflation have been crimping Australia's retail environment for years, but the added impact of bushfires this summer heaped more pressure with consumers dodging shopping for non-essential items.

However, the company benefited from a strong performance at its hardware retail chain, Bunnings, which typically accounts for a big portion of its earnings.

"Bunnings' sales performance was always going to be a key data point given its importance to the group and the rapid change in housing conditions," Jefferies analysts said in a note. "This is a good outcome (for Bunnings) and suggests that the improvement in house prices is driving demand."

Bunnings posted a 3.1% rise in pre-tax earnings to A$961 million for the six months, excluding an impact from the new accounting standard.

The retail-to-chemicals conglomerate also said although it was assessing the impact from the coronavirus outbreak, its businesses had not faced a significant impact so far.

Revenue from continuing operations for the half-year rose 6% to A$15.25 billion and the company announced an interim dividend of 75 cents per share for the period. ($1 = 1.4952 Australian dollars) (Reporting by Renju Jose in Sydney and Nikhil Subba, Rashmi Ashok in Bengaluru; Editing by Shailesh Kuber)