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Australia's Wesfarmers Profit Jumps 53%

Australian conglomerate Wesfarmers beat forecasts with a 53 percent rise in first-half profit, boosted by its acquisition of the Coles supermarket chain, sending its shares up as much as 6 percent.

Wesfarmers said its net profit before one-off items rose to A$601 million (US$551 million) from A$391.9 million a year ago. That was well above average forecasts of A$387 million in a Reuters poll of seven analysts and above the top end of the poll's range of A$348 million to A$440 million.

Wesfarmers said the profit rise came from the inclusion of a five week period of earnings from the Coles businesses, which contributed A$357 million before interest and tax.

The five week period covered the key Christmas shopping season, when Coles makes a large part of its earnings.

Analysts said it had been difficult to forecast the contribution from Coles. "Everyone has guessed incorrectly. There was no way of working out how much Coles contributed over a five-week period, and from their most profitable period," said Credit Suisse analyst Andrew McLennan.

Wesfarmers shares rose 5.9 percent to A$37.60 after the news.

Wesfarmers faces the uphill task of improving sales at Coles following the A$20 billion (US$18 billion) acquisition last November, Australia's largest corporate takeover.

For the five-week period, total revenues at the Coles division, which includes 740 supermarkets, and the Target and Kmart discount chains, increased 7 percent compared with a year earlier.

But comparable store sales rose just 2 percent, in line with inflation and implying further market share loss.

Wesfarmers earlier this month named British retailer Ian McLeod to head the turnaround of the troubled supermarkets, which have lost market share to rival Woolworths which has 770 supermarkets, and smaller independents.

Wesfarmer's Bunnings hardware store chain saw earnings rise 20.4 percent. But coal division earnings slumped 33 percent because of lower contracted coal prices during the half and a higher exchange rate.