Coles reports $1.1 billion profit, sets aside $235 million for staff pay issues

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Topic: Stock Market

Coles said it earned $1.1 billion for the year and will pay a larger dividend to shareholders.

The $235 million set aside for staff pay problems lowered the profit figure.

Oil prices fell as US Treasury Secretary Scott Bessent announced new sanctions on Iran's trade partners.

Disclaimer: this blog is not investment advice.

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By David Chau

Coles gave two profit numbers in its full‑year report:

The report said $235 million (or $165 million after tax) was recorded because of a Federal Court judgment about Fair Work Ombudsman proceedings.

You can read more about the court case and Coles' staff underpayment here.

That explains the gap between the statutory and underlying profit numbers.

Statutory profit includes “significant items”, which are big expenses like a court judgment.

Underlying profit is the measure Coles says better shows its ongoing performance.

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By Kate Ainsworth

Prices current around 12:15 pm AEST

Live updates on the major ASX indices:

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By Kate Ainsworth

The RBA minutes show the bank thought about raising rates by 0.25 percentage points.

The move would have taken the cash rate to 4.6%, the highest since late 2011, but the board kept it at 4.35%.

The minutes said the bank looked at “risks to the inflation forecast”.

Members said that if inflation risks were much higher, they might tighten policy early to protect the economy.

Those risks included:

A long Middle East conflict could cut oil supplies and push prices up; cost pressures could pass to consumers; AI and data‑centre spending could be bigger than expected; Australian demand might be stronger; and productivity growth could be slower than forecast.

The RBA said it kept the cash rate unchanged but stayed alert to upside inflation risks.

It added the bank will raise rates again if needed to keep prices stable and jobs full.

The next RBA decision is on 29 September.

By Daniel Ziffer

You can listen to the ABC Business Daily podcast on weekdays for big news summaries.

The latest episode was about ice hockey.

US‑Canada trade talks broke down, so many Canadian goods now face higher taxes.

Canada’s prime minister says Canada will respond “dollar for dollar”.

The Australian dollar has risen against the US dollar for eight weeks straight.

Is the Australian dollar really stronger, or is the US dollar weaker?

Host Carrington Clarke and ABC Business editor Michael Janda discuss the topics.

You can hear the podcast on any platform; here is a link you can open now.

By Daniel Ziffer

National average unleaded petrol price rose 0.1 cents to 201.6 cents per litre last week.

But you probably want to know the price where you live.

The Australian Institute of Petroleum provides that local data.

By Daniel Ziffer

A whistle‑blower says the former ATO boss avoided tax while at KPMG.

Chris Jordan was a KPMG partner before leading the ATO for over ten years.

Documents say he avoided tax while at KPMG.

He also allegedly pushed tax schemes to clients and got $1.2 million in secret commissions at KPMG.

Parliament released redacted documents showing KPMG partners may have misused client data and ignored a whistle‑blower complaint.

The report by Nassim Khadem says KPMG partners, including Jordan, acted inappropriately in the late 1990s.

A 2021 letter said Jordan should not have led the ATO and that his performance was hurt by alcoholism and cocaine use.

The same whistle‑blower raised the claims again in a 2023 document shown to parliament.

ABC News has seen the unredacted version of the letter.

ABC News does not claim the allegations are true, only that they were made.

Jordan was asked for comment but did not reply; he has previously denied the claims.

By Daniel Ziffer

So much this week!

This list comes from my colleague Stephen Letts.

Australia:

Tue: RBA minutes

Wed: July CPI, Q2 construction work

Thu: July household spending, Q2 capex

International:

Tue: US house prices

Wed: US July PCE inflation, Q2 GDP, Nvidia Q2 earnings, Aug consumer confidence

Thu: China July industrial profits

Fri: US Fed chair Kevin Warsh speech at Jackson Hole

It is an interesting week for data, with many releases that could affect monetary policy.

Wednesday’s July CPI will be closely watched.

Inflation is expected to fall from 3.8 % to about 3.2 % as the July spike drops out of the calculation.

The RBA’s trimmed‑mean CPI measure should also ease to around 3.5 %.

The ABS household spending indicator is expected to show consumers still spending despite slower income growth.

July HSI forecasts predict 0.3 % growth, taking annual growth to about 5.7 %.

We will also see the first look at Q2 GDP partials.

Construction work done is expected to be flat, with residential work covering weaker public‑sector spending.

Private capital spending is also expected to be flat after strong Q1 growth.

This month’s RBA minutes will confirm rates stayed on hold despite inflation worries.

Key US data will be personal consumption expenditure, the Fed’s preferred inflation gauge.

Expect a 0.2 % rise, keeping inflation above the Fed’s target.

Fed chair Kevin Warsh will speak at the Jackson Hole central‑banking festival.

Warsh does not give forward guidance, but bond yields are the current focus.

Markets will look for Fed clues but should not expect big surprises, only the usual “we will lower rates” line.

“How?” remains unanswered.

Nvidia’s Q2 earnings will be the main equity market event, acting as a proxy for the AI sector.

By Daniel Ziffer

Coles analyst Josh Gilbert (etoro) says:

Coles has asked investors to be patient and said its automation spend will pay off; this result finally shows it did.

The headline profit miss is due to the wage remediation charge, while underlying earnings rose 13.7 % and the dividend grew 13 % to 78 cents.

The dividend increase and share‑price outperformance of the ASX200 over the past year reward patient shareholders.

Coles did not need higher prices to boost profit; earnings grew 12.2 % while sales grew slower and shelf prices rose only 1.5 %.

The company saved $311 million in costs and $103 million of warehouse‑project costs have now ended.

The challenge is that cost cuts can only be repeated once, while fuel, wages and supplier costs keep rising.

Coles can keep prices low and protect profit now, but doing both again will be harder.

What is helping? Some of it is robots.

Online fulfilment centres turned EBITDA positive in their second year, so robots picking groceries are now paying off.

Online sales hit $5.6 billion, and early this financial year about one in six dollars spent at Coles was online.

Liquor still hurts Coles. Australians are drinking less, and robots cannot fix that.

Earnings almost halved, warehouse stores struggle with deep discounting and cautious shoppers.

Trading improved early in the new financial year and about 30 stores will close, but this is still a turnaround plan, not a finished turnaround.

Coles plans a heavy investment year, with capex rising toward $1.55 billion.

Shareholders are asked to fund the next spending cycle before enjoying the last one, so a good result may get a cooler response.

Coles share price is down 0.4 % now but has risen 8 % over the past year.

By David Chau

Prices current around 10:45 am AEST

Live updates on the major ASX indices:

By Daniel Ziffer

ARB Corporation, a 4x4 bullbar maker, jumped the most in early trading today.

Its profit rose 16 % making shareholders happy if they bought yesterday.

Over the past year, including today’s rise, the share price is down 47 %.

Key Event

By David Chau

Woodside Energy posted a better‑than‑expected half‑year profit and expects more trading gains after moving cargoes to higher‑priced markets during the Middle‑East war.

Oil prices hit multi‑year highs in April over Middle‑East supply fears, then eased from mid‑June as US‑Iran tensions cooled after a short peace deal.

Woodside said portfolio optimisation captured higher‑value trades, including moving cargoes to better markets and using third‑party purchases for long‑term contracts.

Woodside’s average realised price rose to $74 per barrel of oil equivalent for the six months to 30 June, up from $61.70 a year earlier.

Statutory half‑year profit rose 27 % to $1.67 billion.

Underlying net profit, which Woodside sees as a better performance gauge, rose 7 % to $1.33 billion.

The company announced an interim dividend of 57 cents per share, up from 53 cents last year.

Woodside kept its 2026 production forecast of 174‑185 million barrels of oil equivalent and reaffirmed 2026 capex guidance of $4‑4.5 billion.

CEO Liz Westcott said the company set a $350 million annual cost‑saving target from 2028 through a structured business review.

Woodside shares rose 2.2 % to $34.23 by about 10:35 am AEST.

- with Reuters

By Daniel Ziffer

Has Coles disclosed the actual tobacco revenue?

- Phillip

The Coles Group is one of Australia’s biggest tobacco sellers, a controversial area affected by higher excise taxes, illegal tobacco growth and vaping.

I have not found a specific tobacco figure yet; this is my first try:

We will keep looking into it.

By Daniel Ziffer

The ASX 200 index is up 0.2 % (18.2 points) to 9,121.3 points in early trading.

By Daniel Ziffer

Coles reported its statutory annual profit rose 1 % to $1.1 billion.

But excluding “significant items”, underlying profit rose 13 % to $1.26 billion.

Supermarket sales (excluding tobacco) grew 5.1 %.

It will pay a total dividend of 78 cents per share, a 13 % rise on last year’s payout.

We will have more updates soon!

By Daniel Ziffer

Woodside’s report says global demand for LNG and liquid fuels is high as Iran, Israel and the US entered conflict earlier this year.

Or as it puts it:

During the half, the Middle East conflict disrupted global LNG and oil supply, raising commodity prices and boosting customer demand.

Woodside’s Marketing and Trading division kept optimizing the portfolio to manage risk, maximise value and meet customer commitments.

Woodside CEO Liz Westcott said the company delivered a resilient first half, remaining a secure and reliable supplier during global volatility.

“We delivered strong production, cash flow and shareholder returns while moving into the next growth phase,” she said.

By Daniel Ziffer

Excluding significant items, Coles’ net profit after tax rose 13.7 % in its full‑year results.

The company said this reflects strong EBIT growth and stable financing costs.

One significant item was a $235 million ($165 million after tax) penalty recorded after a Federal Court judgment in September 2025 related to Fair Work Ombudsman proceedings.

By Daniel Ziffer

Australian shares were expected to open slightly higher, helped by possible gains in commodity stocks despite lower oil prices that may weigh on energy shares.

The local share‑price index futures rose a bit, trading 48.1 points below the ASX 200 close.

The benchmark closed 0.5 % higher on Monday.

Trading starts at 10 am AEST.

New Zealand’s S&P/NZX 50 index rose 0.1 % in early trade.

- Reuters

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Coles reports $1.1 billion profit, sets aside $235 million for staff pay issues

Coles reports $1.1 billion profit, sets aside $235 million for staff pay issues

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