Wesfarmers Limited (ASX: WES) in its FY24 annual results for the period ended 30 June 2024 reported a revenue of A$44,189 million, up 1.5% from FY 23's A$ 43,550 million. EBIT increased by 3.3% to A$3,989 million, while EBIT after interest on lease liabilities rose 3.0% to A$3,753 million. NPAT grew by 3.7% to A$ 2,557 million, with Basic Earnings per Share improving by 3.6% to 225.7 cps.
The company has declared a fully-franked final dividend of $1.07 per share, bringing the total ordinary dividend for the year to $1.98 per share, reflecting a 3.7% increase. Net financial debt rose by 6.9% to A$4,258 million, but the Debt to EBITDA ratio improved slightly to 1.8x from 1.9x. Divisional sales performance was bolstered by strong value credentials and product offerings, driving growth in sales and transactions. Catch experienced a decline in gross transaction value (GTV) due to cuts in its instock range to eliminate unprofitable lines. WesCEF's revenue was affected by lower global commodity prices compared to recent years. Wesfarmers Health saw robust sales growth in Priceline, partly due to contributions from recent acquisitions.
Overall, Wesfarmers showed solid Financial Performance with improved profitability and cash flow metrics, despite a rise in debt and a decrease in capital expenditure.
Wesfarmers is committed to long-term value creation through key investments aimed at enhancing its existing businesses and fostering growth. Despite moderated inflation in Australia and New Zealand over FY24, elevated current inflation and interest rates, coupled with persistent domestic cost pressures, present ongoing challenges. However, the Australian economy benefits from low unemployment and population growth.
The integration of the Kmart and Target processes, systems and organisational structures to achieve one operating model across the two brands progressed in line with expectations. The Group’s ongoing investment in lithium reflects Wesfarmers’ focus on long-term shareholder value creation and pursuit of opportunities that will contribute to, and benefit from, global efforts to reduce emissions.
Wesfarmers' retail divisions are equipped to address demand for value-oriented products, supported by previous productivity and efficiency investments. For 1H25, Kmart Group's sales growth aligns with 2H24 trends, Bunnings shows positive but moderated growth due to softening building activity, and Officeworks exceeds 2H24 sales growth. The performance of the industrial businesses is influenced by global commodity prices, foreign exchange, and seasonal factors. Wesfarmers is advancing its integrated lithium project, with Covalent expected to complete its refinery construction by mid-CY25, targeting sales in FY26. With a robust balance sheet and cash-generative portfolio, Wesfarmers is well-equipped to navigate economic uncertainties, projecting net capital expenditure between $1,100 million and $1,300 million for FY25.
The Group plans to enhance its data and digital capabilities by expanding divisional functions and advancing the OnePass membership program, focusing on improving customer experience and leveraging digital assets. OneDigital will work on delivering member benefits and exploring new revenue streams, while OnePass aims to boost membership and sales frequency. Development of shared data assets will support long-term shareholder value. For FY2025, Wesfarmers Ltd’s FY2024 results showed solid revenue and profit growth, led by strong retail performance, especially from Bunnings. However, concerns over lithium investments and regulatory issues have affected the share price. The company's commitment to long-term value and expansion into new sectors positions it well for future growth, with a stable Dividend Yield enhancing its appeal in the Australian market.
Source: Company’s Report
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