Australian coal-to-retail conglomerate Wesfarmers reported a net profit after tax of $1.9 billion for the full year ended 30 June, an increase of 22.8 percent on the previous corresponding period despite tough retail conditions.

The group’s retail businesses recorded solid combined earnings growth for the year, up 8.2 per cent to $2.5 billion, including strong performances from both Coles and Bunnings, in what was a challenging trading period for retailers.

Managing Director Richard Goyder said the group’s result reflected a strong performance during a year affected by natural disasters and a subdued retail trading environment.

“It is pleasing to report solid earnings growth across the group’s retail divisions, ahead of sales growth. During the period all of our retail businesses have reinvested to deliver improvements in value, quality and service. This investment continues to be rewarded by increased customer transactions and volume growth across all retail brands, he said.

Retail conditions during the year were affected by declining consumer confidence and an increased propensity for households to save. Within this environment, all of the group’s retail businesses have experienced price deflation as they invested in lowering prices for their customers.

Wesfarmers said the Coles division continued to deliver strong earnings growth, up 21.2 per cent for the year, considerably ahead of sales growth. The result illustrates the progress made to date in the turnaround program which has built solid sales momentum through significant price investment, an enhanced fresh food offer, operational efficiencies and the progressive renewal of the store network.

Bunnings recorded another good result, with earnings up 10.2 per cent, despite the deflationary impacts of the range reset work under way. Earnings growth was underpinned by good merchandising execution and a strong focus on cost management. Network expansion resulted in 27 new locations being opened during the year.

Kmart and Officeworks both recorded earnings improvements and strong uplift in customer transactions and unit growth as they continued to make good progress in repositioning their offers.

Target’s earnings of $280 million were down on last year, as tight management of expenses and solid transaction growth were insufficient to offset the effects of significant price deflation and clearance activity to manage seasonal inventory.

Wesfarmers directors declared an increase in the final dividend to 85 cents per share fully-franked, taking the full-year dividend to 150 cents per share compared to 125 cents per share last year.