Woolies loses its crown to Coles

BOOMING grocery and hardware sales have helped Wesfarmers overtake Woolworths as Australia’s top company by revenue for the first time.

26/11/2015: Sarah Blake browses through the Tim Tam varieties at Coles Taronga Village store. Stuart McEvoy for The Australian.

BOOMING grocery and hardware sales have helped Wesfarmers leapfrog Woolworths as Australia’s top company by revenue for the first time, according to a new report by market research firm IBISWorld.

Woolworths’ total revenue in 2015 fell by one tenth of a percentage point to $61.15 billion, while a buoyant Wesfarmers grew its total revenue by 3.9 per cent to $62.78 billion in the same period.

IBISWorld attributes the result to Coles gaining market share in the supermarkets and grocery stores industry, and Bunnings’ “vastly superior” results compared to the failed Masters hardware business, which Woolworths is in the process of shutting down.

Woolworths and Coles, previously in second and third place, leapfrogged mining giant BHP Billiton, which had held the top spot since 2010. BHP fell to fourth place in 2015 due to the South 32 demerger, which dragged its overall revenue down by more than 20 per cent.

While the major supermarkets battle it out at the top, it’s the challengers who had a particularly good year. German discounter Aldi sits at number 68 after growing its revenue by 11.2 per cent to reach $5.56 billion.

Meanwhile, US megastore chain Costco, which has pursued an aggressive expansion strategy, increased its revenue in 2015 by a staggering 50.5 per cent to $1.325 billion to sit at number 310 on the list.

IBISWorld senior industry analyst Brooke Tonkin said Woolworths’ supermarkets business was tipped to grow 1.1 per cent this year — much slower than Aldi or Coles.

“Coles and Aldi are both offering lower prices, so Woolworths has quite a bit of work to do,” she told news.com.au. “Costco and Aldi are both growing really strongly thanks to new store openings.”

The big four banks remain the largest four companies in the country by assets, holding $3.5 trillion between them, despite the low interest rate environment putting pressure on growth. NAB was the only one of the big four to see a fall in revenue, down 2.8 per cent.

“Even though growth is not significant in this sector in the current climate, their collective revenue of almost $165 billion puts them firmly near the top of the list,” IBISWorld senior industry analyst Jem Anning said.

The biggest mover in 2015’s list of the country’s top 1000 companies was Bindaree Beef, which jumped 338 spots to number 535, which IBISWorld attributed to a strong rise in demand for Australian beef in export markets.

“This strong demand has driven up beef prices, and Bindaree Beef has benefited from increasing sales both in volume and value terms,” Ms Anning said.

Other big movers included Greencross, Investa, Youi and MetLife Insurance, while the wooden spoon went to Mount Gibson Iron, which plummeted 511 spots.

“Mount Gibson endured numerous challenges during their last reporting year, including volatile and often lower iron ore prices, a flooded mine and losses in foreign exchange hedges,” Ms Anning said.

“However, it wasn’t the only mining company that dealt with difficult operating conditions last financial year. Companies such as Consolidated Minerals and Solid Energy also suffered heavy revenue losses, contributing to their fall down the Top 1000 list.”

AUSTRALIA’S TOP 10 COMPANIES BY REVENUE

1. Wesfarmers — $62.777 billion (+3.9 per cent)

2. Woolworths — $61.149 billion (-0.1 per cent)

3. Rio Tinto — $60.277 billion (-6.9 per cent)

4. BHP Billiton — $59.342 billion (-21.3 per cent)

5. Commonwealth Bank — $45.310 billion (+2.3 per cent)

6. NAB — $43.650 billion (-2.8 per cent)

7. Westpac — $39.670 billion (+2.7 per cent)

8. ANZ — $36.356 billion (+3.1 per cent)

9. Telstra — $26.764 billion (+1.2 per cent)

10. Caltex — $24.240 billion (-2.0 per cent)

Source: IBISWorld

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