Australian conglomerate Wesfarmers' annual profit rises on strong retail performance
Bunnings' sales growth moderated in first 8 weeks of FY25
FY NPAT up 3.7% at A$2.56 bln
Declares final dividend of A$1.07/share
Shares drop as much as 4.1%
Rewrites, adds shares, analysts comment, details on WesCEF segment throughout
By Himanshi Akhand
Aug 29 (Reuters) -Shares in Australia's biggest non-food retail group Wesfarmers WES.AX fell 4% on Thursday after sales momentum at top earner Bunnings moderated in the current fiscal year, even as it reported a nearly 4% rise in its fiscal 2024 profit.
In the first eight weeks of financial year 2025, sales growth in Bunnings, the country's biggest home improvement chain, remained positive but weakened from the second half of fiscal 2024.
"Despite challenging trading conditions in the commercial sector and ongoing household budget pressures, Bunnings remains well placed to continue providing value to cost-conscious customers," Wesfarmers said.
The company expects market-wide softness in building activity to continue in fiscal 2025, but anticipates population growth and shortages in Australian housing stock to support a recovery over the medium term.
"The FY24 was solid but sales momentum has moderated in Bunnings, and Wesfarmers expects market softness to continue. This doesn't appear enough to support the share price at current levels given the strong run," Philip Kimber, analysts at E&P said.
Wesfarmers' shares, which have risen more than 35% this year as of Wednesday's close, fell as much as 4.1% by 0041 GMT.
The apparel-to-lithium conglomerate's annual net profit after tax was A$2.56 billion ($1.74 billion), largely in line with LSEG estimate of A$2.57 billion and higher than A$2.47 billion a year earlier.
This was attributed to strong performance at its retail divisions which offered low-price products to increasingly cost-conscious households.
Bunnings contributed roughly 60% to the company's total earnings and saw 2.3% growth in its revenue for the year ended June, while budget department store chain Kmart's revenue grew 4.4%. Kmart is the second biggest earner after Bunnings.
Earnings for Wesfarmers Chemicals, Energy and Fertilisers segment fell 34.2% for the year, with the lithium business making a A$26 million loss due to lower prices and high cost of production as it ramps up volume at its Mt Holland project.
Wesfarmers expects the sale of spodumene concentrate, a high-purity lithium, to be loss making in the first half of fiscal 2025 due to increased production costs during ramp-up.
It declared a final dividend of A$1.07 per share, higher than A$1.03 apiece last year.
($1 = 1.4741 Australian dollars)
Reporting by Himanshi Akhand and Archishma Iyer in Bengaluru; Editing by Tasim Zahid, Maju Samuel and Jacqueline Wong
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