Wesfarmers (WES) H1 2025 earnings summary

Executive summary

• Revenue rose 3.6% year-over-year to $23.5 billion, with net profit after tax up 2.9% to $1.5 billion and EBIT up 4.7% to $2.3 billion, despite challenging economic conditions.

• Bunnings and Kmart Group drove growth with strong value propositions and productivity initiatives, while Officeworks and WesCEF also contributed positively.

• Interim fully-franked dividend increased 4.4% to $0.95 per share, reflecting strong execution and focus on shareholder returns.

• Portfolio actions included the sale of Coregas for $770 million, wind-down of Catch, and divestment of WesCEF LPG and LNG businesses to improve returns.

• Continued investment in transformation, digital, and sustainability initiatives across divisions, with recent acquisitions in Officeworks and Health.

Financial highlights

• Revenue: $23.5 billion (+3.6% YoY); NPAT: $1.5 billion (+2.9% YoY); EBIT: $2.3 billion (+4.7% YoY).

• Operating cash flows declined 11.1% to $2.6 billion, mainly due to higher tax paid and working capital investment.

• Free cash flow for the half was $2.0 billion, in line with the prior period.

• Gross capital expenditure up 2.9% to $594 million; net capex down slightly to $555 million.

• Return on equity at 31.2%; cash realisation ratio at 108%.

Outlook and guidance

• Retail divisions expected to benefit from strong value credentials and expanding addressable markets; Bunnings, Kmart Group, and Officeworks maintain sales momentum into H2 FY25.

• Covalent lithium refinery commissioning on track for mid-2025, with ramp-up over 18 months; capex guidance unchanged at $1.1–$1.3 billion for FY25.

• Cost pressures and inflation expected to persist, but productivity and technology investments to help offset impacts.

• Catch wind-down to complete in Q4 FY25, with one-off closure costs of $50–$60 million expected in H2.

• Industrial businesses remain sensitive to commodity prices, FX rates, and seasonality.