Wesfarmers’ Goyder Looks Overseas to Maintain Growth Pace

Wesfarmers Ltd. (WES), the retail, industrial and mining company that’s Australia’s biggest private employer, is considering overseas acquisitions to maintain the growth it’s achieved since going public in 1984.

“To keep the rate of growth that we’ve had since we listed 30 years ago, we’re probably going to have to expand” overseas, Richard Goyder, group managing director, said in an interview in Sydney yesterday. “It’s the right thing to do.”

Wesfarmers must be able to run businesses beyond its home market and has a strategy to expand internationally, said Goyder, who declined to say in which countries the company was eyeing deals. Just A$27 million ($25 million) of Wesfarmers’ A$59.4 billion in sales last year were outside Australia and New Zealand, data compiled by Bloomberg show.

Wesfarmers’ market value has more than tripled since it bought Coles Group Ltd. in 2007 in Australia’s biggest takeover, and is now worth more than Tesco Plc. Sales, which rose an average of 24 percent annually since 1991, have slowed to an average pace of 4.1 percent over the past four years, according to data compiled by Bloomberg.

Goyder, 54, said Wesfarmers was less focused on developed economies and would look to markets where it saw the biggest growth potential.

Photographer: Ian Waldie/Bloomberg

Richard Goyder, managing director of Wesfarmers Ltd. Close

Richard Goyder, managing director of Wesfarmers Ltd.

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Photographer: Ian Waldie/Bloomberg

Richard Goyder, managing director of Wesfarmers Ltd.

“Unless you buy something at a real bargain-basement price, you’d want to be in a higher-growth region,” he said. “Australian companies have got a mixed track record of going overseas.”

War Chest

The company will have more than A$5 billion spare to make acquisitions or return to shareholders after it completes the A$3 billion sale of two insurance units, Ben Gilbert, an analyst at UBS AG in Sydney, wrote in an April 9 note to clients.

Wesfarmers made a preliminary bid for Hutchison Whampoa Ltd.’s Hong Kong-based ParknShop supermarket chain last year, according to people with knowledge of the matter. The company has an office in Hong Kong.

The A$18 billion Coles deal gave Wesfarmers, a former farmers’ cooperative, control of the eponymous supermarket chain, Australia’s second-largest, as well as the department stores Kmart and Target.

The Perth-based conglomerate also owns hardware stores, chemicals plants, coal mines and industrial equipment suppliers, as well as stakes in an investment bank and a sawmill.

Goyder said Wesfarmers is looking at buying coal mines, particularly those that produce the coking coal used in making steel, amid a record slump in prices for the commodity.

“Certainly the market’s at a low point,” he said. “There’s going to be more things to look at than there has been.”

Coking Decline

Contract prices for seaborne hard coking coal are about $120 a metric ton, a 64 percent drop from the June 2011 peak of $330, according to data compiled by Bloomberg. The previous record slump in 2009 saw the commodity shed about 57 percent.

The majority of coking coal producers aren’t making money and are likely to cut production, Goyder said on an investor call last month.

Wesfarmers’ agreed purchase from Peabody Energy Corp. of the lease of an undeveloped coal deposit called MDL-162 in January was the company’s first acquisition since completing the Coles takeover.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Brendan Scott, Suresh Seshadri

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