results
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ignoring the feel good stuff)
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Outlook
Wesfarmers remains focused on long-term value creation and continues to invest to strengthen its existing businesses and develop platforms for growth. Low unemployment and strong population growth provide support to overall economic conditions in Australia, driving demand and contributing to the need for additional housing stock. While Australian inflation has moderated over the last 12 months, current inflation and interest rates remain elevated, and consumers continue to focus on value and manage spending carefully.
The strong value credentials and expanding offer of everyday products across the Group’s retail businesses make them well positioned in the current environment and for any improvements in consumer sentiment. For the first five weeks of the second half of the 2024 financial year,
Kmart Group has continued to deliver strong sales growth. Sales growth in
Bunnings remained broadly in line with results for the first half.
Officeworks’ sales for the first five weeks were in line with the prior corresponding period.
Domestic cost pressures in Australia and New Zealand are expected to remain elevated, driven by inflation, labour market constraints and wage cost increases, and energy and supply chain costs. The Group is monitoring ongoing pressures in international supply chains and key shipping routes, and has implemented additional contingencies where possible to mitigate the risk of interruptions.
Wesfarmers’ larger businesses are benefitting from investments made to digitise their operations and develop their sourcing capabilities. Together with benefits from proactive investments in productivity and efficiency over recent years, the Group remains focused on disciplined cost management.
The high quality of the Mt Holland deposit is expected to enable the integrated Covalent
lithium hydroxide project to operate with an attractive relative cost structure and support satisfactory long-term shareholder returns. Following the successful commissioning of the concentrator at Mt Holland, operations are now in ramp up and WesCEF’s share of spodumene concentrate production in the 2024 financial year is expected to be approximately 50,000 tonnes. Spodumene concentrate sales volume for 2024 will be dependent on commercial factors including the prevailing spot price, but at current spodumene prices sales will not contribute positive earnings during the 2024 financial year due to the higher cost of production while volumes ramp up towards full capacity.
The performance of the Group’s
industrial businesses remains subject to international commodity prices, foreign exchange rates, competitive factors and seasonal outcomes.
Wesfarmers will continue to invest in its existing operations and in the development of platforms for long-term growth and shareholder value creation. The Group expects net capital expenditure of between $1,000 million and $1,200 million for the 2024 financial year, subject to net property investment and the timing of project expenditures.