Company Reports

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacturing and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Wesfarmers' underlying net profit after tax increased by 8% to AUD 2.9 billion in fiscal 2026. The conglomerate's two largest segments, Bunnings and Kmart, underpinned the result, as did higher lithium prices. Heading into fiscal 2027, Kmart and lithium earnings are under pressure. Shares fell 5%.

Wesfarmers spent its strategy day emphasizing the importance of improving digital capabilities in its two core retail brands, Bunnings and Kmart. Outside of Anko, there are no big aspirations for international growth; instead, it backs its domestic bets in health, chemicals, and lithium.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacturing and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacturing and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Wesfarmers' first-half fiscal 2026 net profit after tax rose 9% to AUD 1.6 billion on 3% sales growth and better profit margins at its two largest businesses, Bunnings and Kmart. A rally in lithium prices helped turn a maiden profit at its new mine. The fully franked DPS is up 7% to AUD 1.02.

The near-term outlook for consumer cyclicals is positive. After a multiyear slump, consumer sentiment is improving. Real household incomes are growing again. The savings rate is back to normal levels, and interest rate cuts help household budgets. But rising inflation introduces some downside risk.

Wesfarmers' underlying net profit after tax increased by 4% to AUD 2.7 billion in fiscal 2025. The conglomerate's two largest segments, hardware retailer Bunnings and Kmart department stores, underlined the result. Lower commodity prices, such as for lithium, weighed on the smaller WesCEF business.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacture and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Household incomes are growing in real terms after a period of rampant inflation. With inflation back within the Reserve Bank of Australia’s target range, the focus is shifting to keeping the job market in good shape. Monetary settings are slightly restrictive, providing room for more easing.

In a very disruptive retailing environment, Wesfarmers is proving defensive. Its earnings have been less volatile than earnings of other large-cap cyclicals over recent years marked by lockdowns and massive stimulus, followed by rampant inflation, rising mortgage rates, and cost-of-living pressures.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacture and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Tariffs are softening Australian consumer sentiment and investors are preferring defensives over cyclical retailers. Since sweeping US tariffs were announced April 2, our Morningstar Australia Consumer Defensive Index is up 3%, but the Morningstar Australia Consumer Cyclical Index is flat.

Global markets have been rattled by US President Donald Trump's "liberation day" tariffs. Trump has raised tariff rates to levels not seen in a century, which will likely set in motion a cascade of supply-demand side shocks, all acting to weigh on the rate of economic growth.

Wesfarmers reported soft revenue and profit growth against the backdrop of weak economic growth and cautious consumers. The conglomerate's revenue rose 4% in the first half of fiscal 2025 from a year ago, while net profit after tax increased 3% to AUD 1.5 billion.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacture and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.

Retail spending is rebounding due to a larger workforce, higher wages, and meaningful fiscal stimulus. Discretionary categories are benefiting more than defensives from rising household incomes.

Trading momentum for nonessential goods is picking up. So far in fiscal 2025, sales growth is improving at Super Retail’s chains and Woolworths’ Big W discount department stores, as well as at electronics goods retailers JB Hi-Fi, Harvey Norman, and Kogan.

Wide-moat Wesfarmers’ largest businesses had a surprisingly soft start to the new financial year. We now expect only low mid-single-digit EPS growth in fiscal 2025. But the real story is upcoming lithium sales. We continue to forecast the Covalent lithium project to spark solid EPS growth over the medium term, with first hydroxide sales expected from fiscal 2026. Our EPS CAGR estimate of 9% for the five years to fiscal 2029 compares with a CAGR of 6% for the five years to fiscal 2024. We lift our fair value estimate by 3% to AUD 44.50. The time value of money impact more than offsets the immaterial impact of our softer near-term outlook.

Wesfarmers is Australia's best-known conglomerate. Activities span discount department stores, office supplies, home improvement, energy manufacture and distribution, industrial and safety supplies, chemicals, and fertilizers. Business interests can be divided into two broad groups: retail and industrial.