Key Highlights

• The fully franked ordinary Dividend was 222 cents per share, up 7.8%, and free Cash Flow reached $3,992 million, up 15.8%.

• Bunnings Earnings rose 5.1%, with sales growth described as consistent across categories.

• Mt Holland's expansion is ongoing, and part of FY27 Capital Expenditure of $1.3 to $1.5 billion is directed there, together with store refurbishments, Supply chains and a new modular residential construction joint venture.

• The capex range of $1.3 to $1.5 billion is a forecast and deserves attention.

What does a conglomerate's result look like when its hardware, discount retail and chemicals arms all pull in different directions? Wesfarmers Limited (ASX:WES) gave one answer on 27 August 2026 with its FY26 report. Revenue was $47,274 million, up 3.4%, and net profit after tax excluding significant items rose 8.3%. Statutory net profit after tax was $2,874 million, down 1.8% because of significant items. The central story is that lithium swung into profit inside the chemicals division while Officeworks absorbed heavy one-off costs, a split that reveals how diversified the earnings base has become.

The headline numbers

The fully franked ordinary dividend was 222 cents per share, up 7.8%, and free cash flow reached $3,992 million, up 15.8%. Return on Equity over the twelve months was 35.5%.

A 222-cent dividend is a reported, declared figure and not a forecast. Free cash flow growth faster than profit growth is a useful sign, because it suggests earnings converted into cash, although Working Capital timing can flatter a single year.

Divisional performance

Bunnings earnings rose 5.1%, with sales growth described as consistent across categories. Kmart Group earnings were up 6.0%, driven by transformation projects and a value strategy. Officeworks earnings fell 22.2%, which management largely attributed to one-off transformation costs, even though sales rose 3.7%. WesCEF, the chemicals, energy and fertilisers division, increased earnings by 18.5%: its lithium Business swung into profit, which offset pressure on ammonia pricing from global supply disruptions.

From 1 July 2026, Blackwoods and Workwear move into Bunnings Group. That is a structural change for the industrial arm, and it means FY27 divisional comparisons will need adjusting for the transfer.

Lithium: exposure and what to understand

The lithium exposure comes through Wesfarmers' interest in the Mt Holland project in Western Australia, which produces spodumene concentrate and lithium hydroxide through the Covalent venture. Its swing to profit matters because lithium was a source of losses and Impairment concern when prices were low. The profit turnaround reported for FY26 is a reported fact, but lithium prices are volatile and the division's contribution remains sensitive to them. Mt Holland's expansion is ongoing, and part of FY27 capital expenditure of $1.3 to $1.5 billion is directed there, together with store refurbishments, supply chains and a new modular residential construction joint venture.

Wesfarmers' ammonia and fertiliser operations sit in the same division, which is why one commodity's recovery can be diluted by another's weakness. For investors, WesCEF is better understood as several commodity-linked businesses than as a single lithium story.

Cash generation deserves a closer look because it funds both the dividend and the reinvestment programme. Free cash flow of $3,992 million in FY26 compares with a dividend of 222 cents per share, and the group has historically balanced the two with a conservative approach to debt. A group of this size also benefits from the diversity of its earnings: a weaker year at Officeworks or in ammonia can be offset elsewhere, which is the practical argument for a conglomerate structure, although it also makes the whole harder to analyse than a single-division company.

Outlook and trading update

Wesfarmers said early FY27 Bunnings sales growth is slightly ahead of the second half of FY26, and that Kmart and Officeworks show positive momentum. Those are management observations about a few weeks of trading, not guidance for the year. The company said it is well placed to deliver satisfactory long-term returns, a deliberately measured phrase that is typical of the group.

The capex range of $1.3 to $1.5 billion is a forecast and deserves attention. It indicates continued reinvestment in stores and supply chains, and it will compete with dividends and other capital uses for cash.

Competitive position

Bunnings holds a leading position in Australian and New Zealand home improvement and trade, competing with Mitre 10, independents and online retailers. Kmart competes in discount general merchandise with Target-style rivals, Big W and online marketplaces. Officeworks faces structural change in office supplies and technology retail. Scale, private-label products and supply-chain efficiency are the advantages typically cited across the group.

Risks and items to monitor

Management and commentators point to higher labour and operating costs, household cost-of-living pressure, ammonia pricing affected by global supply disruption, and the Officeworks transformation costs. Additional risks include lithium price volatility, execution on the new modular housing joint venture, and the integration of Blackwoods and Workwear into Bunnings.

Dates and events to watch include the annual general meeting, the usual quarterly sales commentary at the AGM, the first-half FY27 result in February 2027 (typical timing, not a confirmed date), progress at Mt Holland, and whether Officeworks earnings recover once transformation costs fall away. Investors can also track the dividend payout against free cash flow to see whether the 222-cent level looks comfortable.

Overall, the FY26 result shows a group with resilient retail franchises and a Commodity business that has turned a corner. The unanswered questions are whether lithium profitability can be sustained and how much reinvestment the next phase requires.