Wesfarmers Annual Profit Rises 4.8%, Outlook Mixed Across Divisions

By David Winning

SYDNEY--Wesfarmers said its annual net profit rose by 4.8%, but offered a mixed outlook for fiscal 2024 with its retail businesses potentially benefiting from consumers trading down but existing operations of its commodities unit set for a steep drop in earnings.

Wesfarmers reported a net profit of 2.47 billion Australian dollars (US$1.59 billion) in the 12 months through June, up from A$2.35 billion a year ago. Earnings before interest and tax lifted 6.3% to A$3.86 billion while annual revenue rose by 18% to A$43.55 billion.

Directors of the company declared a final dividend of A$1.03 per security, bringing the full-year payout to A$1.91. That compared to a total payout of A$1.80 a year ago.

"Wesfarmers' financial results were underpinned by strong divisional earnings growth of 12.9% for the year, as the Group's operating businesses continued to respond well to trading and market conditions," said Managing Director Rob Scott. "Overall, Wesfarmers' net profit growth of 4.8% reflected strong combined divisional earnings growth, partially offset by a significant change in non-cash property revaluations recorded at the Group level."

Looking ahead, Wesfarmers said cost pressures in Australia and New Zealand are expected to remain elevated, driven by inflation, labor market constraints and wage cost increases, and domestic supply chain costs.

It said elevated inflation and high interest rates are making many customers more value conscious and choosing to trade down to lower-priced products. Wesfarmers's retail brands are well placed to meet that shift in demand, the company said.

"For the first seven weeks of the 2024 financial year, sales growth for Kmart Group has continued to benefit from strong trading results in Kmart, but growth has moderated from the second half of the 2023 financial year," Wesfarmers said.

Sales growth in Bunnings has remained in line with the second half of fiscal 2023, while Officeworks' sales for the first seven weeks of fiscal 2024 were in line with the prior year, Wesfarmers said.

It said earnings from existing operations of its industrial business WesCEF are likely to decline sharply in fiscal 2024, driven by lower ammonia prices and higher input gas costs. But it will get a boost from the company's new lithium business, which is expected to start output in fiscal 2024.

Write to David Winning at david.winning@wsj.com

(END) Dow Jones Newswires

August 24, 2023 18:22 ET (22:22 GMT)

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