Likely to retain the business in its portfolio.
Wesfarmers has put the brakes on the potential initial public offering (IPO) of Officeworks that was first announced in February this year, “in light of current equity market conditions”.
“Wesfarmers has determined that an IPO of Officeworks at this point in time would not realise appropriate value and would not be in the best interests of its shareholders,” a company statement released to the ASX said.
Since acquiring the business in 2007, Officeworks has more than doubled its earnings and improved its return on capital from 5.7% in the 2009 financial year to 13.9% in the first half of the 2017 financial year.
“Officeworks is well positioned for future growth with a strong, competitive market position and ongoing initiatives to grow its addressable market,” the statement continued.
Wesfarmers managing director, Richard Goyder reiterated the Group was “comfortable retaining Officeworks in its portfolio and the business would be divested only if it was considered to be in the best interests of Wesfarmers’ shareholders”.
There are 163 Officeworks stores currently operating across Australia with turnover increasing by 6% over the half year to 31 December 2016 to $927 million while earnings before interest and tax grew 5% to $62 million.