Soft FY25 start weighs on Wesfarmers shares
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More news: Shares in Wesfarmers are down nearly 3% to $75.13 despite the conglomerate reporting a lift in full-year profit. Analysts attributed the drop to the recent run-up in the stock as well as a softer trading update for FY25.
The group said sales growth at Bunnings moderated in the first 8 weeks of FY25, impacted by the continued market-wide softening in building activity. While Kmart sales growth was broadly in line, it expects earnings growth to moderate amid cost-of-living pressures.
What they said: "The FY24 was solid but sales momentum has moderated in Bunnings. This doesn’t appear enough to support the share price at current levels, given the strong run," E&P's retail analyst Phillip Kimber said in a note.
Wesfarmers lifts profit 3.7%, meets estimates
The news: Wesfarmers reported a 3.7% rise in net profit after tax for the 2024 financial year, meeting average forecasts, as the Bunnings and Kmart owner flagged the impacts of "numerous headwinds".
The numbers: The Perth-based conglomerate posted NPAT of $2.56 billion for the year, up from $2.46 billion in FY23 and in line with consensus estimates, according to Visible Alpha data. Group revenue grew 1.5% year on year to $44.2 billion while earnings before interest and tax rose 3.3% to $4 billion.
Wesfarmers declared a final dividend of $1.07 share, up from 103 cents in FY23 and meeting analysts' estimates.
The group said it expects net capital expenditure of between $1.1 billion and $1.3 billion for the 2025 financial year.
The context: Wesfarmers reported revenue and earnings gains across Bunnings, Kmart and Officeworks, as well as its industrial and safety and Wesfarmers Health businesses.
However, earnings from its chemicals energy and fertilisers business WesCEF lowered 34.2% year on year driven by lower global commodity prices. Likewise, Wesfarmers' online retail business Catch reported a loss of $96 million for the year, including $23 million in restructuring costs and a non-cash impairment to its brand value.
The group noted that while inflation in Australia and New Zealand moderated over the year, current inflation and interest rates remain elevated, with cost of doing business pressures expected to persist into the 2025 financial year.
What they said: "We expected a challenging year and there were numerous headwinds to navigate with cost of living pressures, rising costs of doing business, subdued activity in residential construction and significant volatility in key commodities," said Wesfarmers managing director Rob Scott.
"Westfarmers' business executed well, with the retail divisions responding effectively as households increasingly shifted to value during the year," he said. "Sales and earnings growth in the retail divisions was supported by everyday low price offerings and products with broad customer appeal."
The source: ASX announcement
