News: UPDATE 1-Australia's Wesfarmers posts record annual profit on coal, home improvement

• Net profit A$2.87 bln vs A$2.90 analyst f'casts
• Final dividend A$1.20 vs $0.95 prior year
• Coal, hardware, department stores grow; supermarkets down

(Adds shares, earnings breakdown, company comment)

Aug 17 (Reuters) - Australian retail-to-mining conglomerate Wesfarmers Ltd (WES) on Thursday posted a record annual profit but just missed analyst forecasts, boosted by the coal and home improvement units although supermarket sales were flat.

The owner of the country's No. 2 grocery chain, Coles, and discount department stores Target and Kmart said net profit for the year to end-June was A$2.87 billion ($2.27 billion), up from A$407 million a year ago, marginally missing the A$2.90 billion average forecast of 9 analysts polled by Thomson Reuters I/B/E/S.

Not including large one-off writedowns on its Target and coal assets the previous year, underlying annual profit still rose 27.6 percent for Australia's biggest company by sales.

Wesfarmers shares rose 1 percent in early trading, in a flat overall market.

Food and liquor sales, which make up about nearly half the company's revenue, rose 1.6 percent to A$33.08 billion.

Coles, however, saw pre-tax profit decline 13.5 percent to A$1.61 billion because of lower financial services earnings following the sale of a credit card unit to Citigroup in February, the company said.

Food and liquor price deflation was 0.8 percent, half the rate of the previous year, as a cyclone helped push up the price of fresh produce, it added.

Coles and larger rival Woolworths Ltd (WOW) have been slashing prices amid fierce competition from each other and from new bargain rivals like Germany's ALDI Inc [ALDIEI.UL] and U.S.-listed Costco Wholesale Corp .

"The operating environment in the first half of the 2018 financial year is expected to remain highly competitive," Wesfarmers said in a statement.

The earnings decline from Coles was offset by a A$868 million increase in earnings for the industrials division thanks to higher prices and production at its coal division.

The company declared a final dividend of A$1.20 per share, up from A$0.95 a share last year. ($1 = 1.2618 Australian dollars)