Coles owner Wesfarmers has delivered a 33.6 per cent rise in annual profit and expects solid growth again this year despite the challenges posed by a tougher economic environment.

The group, which acquired Coles in November for $20billion, said changes at the supermarkets and merchandise operation would gain momentum as it continued to lay the foundations for its turnaround.

Wesfarmers' net profit for the 12 months to June was $1.05billion, up by 33.6 per cent on the previous year.

The result reflected a seven-month contribution from the Coles business, and strong performances at its Bunnings hardware, energy, resources, chemicals and fertilisers, and industrial and safety divisions.

Revenue for 2007-08 rose by 244 per cent to $33.58billion, with about half coming from Coles business, which generated revenue of $16.9billion.

The conglomerate said the outlook was for continuing solid performances across most of its business in 2008-09, with the resources unit expected to be particularly strong.

Managing director Richard Goyder said, ''The results are pleasing given a tightening economy and the Varanus gas outage which curtailed our Western Australian energy and chemicals operations in June.''

Wesfarmers said Coles was still in the early stages of a five-year turnaround but he expected strategies to revitalise the business, including the development of a new store format before the end of 2008-09, would pave the way for a sustained performance improvement. ''The changes won't suddenly be obvious on a particular day or date, but ... the results of progress made to date, and the strategies being planned, will deliver value to our shareholders and our customers.''

Comparative store sales growth in food and liquor for the ownership period was 2.8 per cent. Wesfarmers said food and liquor sales were improving now that its market share had stabilised. Mr Goyder said it would continue to absorb increased food costs at Coles instead of passing them on to consumers.

Wesfarmers' forecast for the rest of its large retail portfolio was mixed, with continued sales growth expected for Bunnings, moderate sales growth expected for Officeworks and an accelerated store refurbishment program at Target expected to affect profitability.

Wesfarmers declared a final dividend of $1.35, taking the total for the year to $2 a share, down from $2.25 a year earlier. Wesfarmers shares fell $1.65 to $32.90. AAP