The Wesfarmers Ltd (ASX: WES) share price is the centre of attention after reporting its FY26 half-year result with solid net profit growth.
Wesfarmers is the parent company of a number of businesses including Bunnings, Kmart, Officeworks, Target, Priceline, Beaumont Tiles, Instantscripts, skincare clinics, a lithium mine and more.
Wesfarmers FY26 half-year result
Here are some of the main financial highlights from the Wesfarmers HY26 report:
- Revenue grew 3.1% to $24.2 billion
- EBIT increased 8.4% to $2.49 billion
- Net profit grew 9.3% to $1.6 billion
- Earnings per share (EPS) increased 9.3% to $1.41
- Operating cashflow down 3.3% to $2.49 billion
- Free cashflow surged 35.6% higher to $2.7 billion
- Interim dividend per share hiked by 7.4%
What happened in the report?
There was solid growth at the two core businesses of Bunnings Group and Kmart Group, while WesCEF (the chemicals, energy and fertiliser segment) saw a sizeable increase in earnings.
Bunnings Group reported total sales growth of 4% to $10.67 billion, with its earnings growing by 5% to $1.39 billion. There was continued sales growth in both the consumer and commercial segments.
Wesfarmers reported that strong cost discipline and structural productivity improvements enabled Bunnings to reinvest in its ongoing goal of lowest prices and the customer experience.
Kmart Group delivered total sales growth of 3.2% to $6.4 billion, with divisional earnings climbing 6.1% to $683 million. This reflected a “solid trading performance and disciplined pricing”, as well as inventory management, in a competitive environment.
Wesfarmers also reported that productivity benefits were delivered at Kmart Group through the ongoing digitisation of operations.
The ASX retail giant said that its divisions benefited from productivity initiatives and a modest improvement in consumer demand. However, higher costs continued to weigh on many households and businesses, along with subdued residential construction activity.
The next most important division for Wesfarmers’ profit is WesCEF – it reported a 3.2% decline in revenue to $1.17 billion. However, the WesCEF earnings jumped 18.1% to $209 million with a positive earnings contribution from lithium due to a stronger performance at the mine and concentrator, as well as a higher lithium price.
Officeworks revenue rose 4.7% to $1.83 billion, though its earnings declined 21.8% (or $19 million) to $68 million. It was impacted by $15 million in costs associated with its ‘transformation program’ with restructuring and ERP (software) replacement costs. Earnings were also impacted by clearance activity.
The Wesfarmers Health division’s revenue grew 8.4% to $3.28 billion, with a 35.7% rise in earnings. Underlying earnings grew 9.8% to $45 million. This reflected a “strong execution of the transformation program”, as well as a good performance in Priceline and a “material uplift” in the wholesale division.
The industrial and safety division saw a 1.3% rise of revenue to $869 billion and a 23.1% rise in earnings to $32 million, excluding the sold Coregas business.
Outlook for the Wesfarmers share price
After the end of the half, Wesfarmers entered into partnerships with Microsoft and Google Cloud to accelerate progress on ‘AI solutions across the group. This will “provide access to new technologies and expertise to upskill team members and transform key business processes”.
Wesfarmers said its retail divisions are “well positioned to drive profitable growth” despite the economic uncertainty, the outlook for inflation and the recent interest rate rise.
The company said its retail divisions continue to trade well in the first six weeks of the second half of FY26, with Bunnings’ and Officeworks’ sales growth “broadly in line” with the growth rate of HY26, while Kmart Group’s sales growth was stronger than the first half.
Wesfarmers said the joint venture’s lithium refinery commissioning has been “pleasing” but also indicated that the production ramp-up at Covalent Lithium is now expected to be “extended” to address “intermittent odour issues”. It can sell spodumene (raw lithium) volumes in excess of the refinery’s requirements.
Wesfarmers Health is expected to continue to improve earnings and returns, including growing its market share in its higher-margin, less capital-intensive consumer business.
The solid and long-term progression of the company is a great support for long-term growth of profit and the Wesfarmers share price. I’m particularly intrigued to see the long-term potential of its Anko-branded stores outside of Australia (which currently (only) operate in the Philippines).
I think it’s one of the leading ASX dividend shares to keep a watch on.
