Wesfarmers Limited

Wesfarmers reported net profit after tax of $2.9 billion, up 8.3% excluding significant items in the prior year. Total dividend for the year was $2.22 per share fully franked, up 7.8%, including a final dividend of $1.20 per share. Group divisional earnings increased 6.2% for the year; Bunnings earnings excluding property contributions were $2.45 billion, up 5%, Kmart Group earnings were $1.1 billion, up 6%, WesCEF earnings were $473 million, up 18.5%, Officeworks earnings were $165 million and 22.2% below the prior corresponding period, Wesfarmers Health earnings were $92 million up 12.2%, and Industrial and Safety earnings excluding Coregas were $76 million, up 16.9%. Group operating cash flow was 6.5% lower, free cash flow rose 15.8% to $4 billion, gross capex was $1.2 billion, net capex was down 29% to $779 million, net financial debt was $5.3 billion, and debt-to-EBITDA increased from 1.7x to 1.9x. For FY27, net capex is expected to be $1.3 billion to $1.5 billion, including about $200 million for Mt Holland expansion, and borrowing costs are expected to be higher.

Rob Scott framed the year as another step in Wesfarmers’ long-term model of low costs, low prices and reinvestment, emphasizing the “virtuous cycle” that links productivity to customer value and shareholder returns. He said the portfolio is strong, the group is making good progress on growth and productivity, and newer platforms such as health, lithium, modular construction and retail media offer exposure to attractive long-term demand. His tone was confident but measured: he acknowledged persistent cost-of-living pressure and softer sentiment, while saying the group is well positioned to navigate different economic conditions.

Anthony Gianotti highlighted broad-based sales growth across all divisions and said earnings rose 6.2% at the group level, supported by Bunnings, Kmart Group, WesCEF and Health. He pointed to disciplined working capital management in the retail divisions, with cash realization at 99%, and explained that lower operating cash flow was driven by temporary inventory investments in WesCEF and Health to protect supply. He also walked through capital and balance sheet metrics, including $1.2 billion of gross capex, $779 million of net capex, $5.3 billion of net debt, a 1.9x debt-to-EBITDA ratio, $1.7 billion of unused bank facilities, and a higher FY27 borrowing-cost outlook due to higher debt, capex and funding costs.

Analysts focused on consumer demand, Bunnings growth durability, wage pressure, K Home rollout, new categories such as appliances, cost of goods inflation, and the earnings outlook for WesCEF and lithium. Management said consumer behavior is more deliberate and value-seeking, but not worsening, and that Bunnings and Kmart are seeing strength in new categories, marketplaces and product attachment. On wages, Bunnings said the new EBA is still under discussion but they do not expect anything above GRIA and believe productivity can offset it. On WesCEF and lithium, management said FY27 should benefit from ammonia normalization, capacity expansions, recontracted volumes and the ability to redirect spodumene into the spot market if refinery ramp-up is slower than expected.