Wesfarmers (ASX:WES) Lifts Underlying Profit as Bunnings and Kmart Offset WesCEF Headwinds

Sonal Goyal

27 August 2026 10:24 AM AEST

Wesfarmers (ASX:WES) Lifts Underlying Profit as Bunnings and Kmart Offset WesCEF Headwinds

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Key Highlights

Statutory NPAT was $2,874 million, down 1.8% on FY25, while NPAT excluding significant items rose 8.3% to $2,874 million.
Group Revenue increased 3.4% to $47,274 million, with Earnings before interest and tax up 7.3% to $4,493 million excluding significant items.
Operating cash flows fell 6.5% to $4,272 million, reflecting deliberate Working Capital Investment in WesCEF and Health.
A fully franked final Dividend of $1.20 per share was declared, bringing full-year Ordinary Dividends to $2.22 per share, up 7.8% on FY25.

Wesfarmers Limited (ASX:WES) reported statutory net profit after tax of $2,874 million for the year ended 30 June 2026, down 1.8% on FY25's $2,926 million. Excluding significant items recorded in the prior period, NPAT increased 8.3% for the year. Group revenue rose 3.4% to $47,274 million, while earnings before interest and tax, excluding significant items, increased 7.3% to $4,493 million from $4,186 million in FY25.

Managing Director Rob Scott said the result reflected the resilience of the Group's businesses and continued execution of its growth agenda, with strong earnings contributions from Bunnings Group, Kmart Group and WesCEF. Basic Earnings Per Share excluding significant items rose 8.3% to 253.4 cents, while basic earnings per share on a statutory basis fell 1.8% to 253.4 cents.

Retail Divisions Deliver Growth Amid Cost Pressures

Mr Scott said Bunnings and Kmart Group's everyday low prices continued to drive sales and earnings growth, with disciplined execution helping to offset cost pressures and deliver Operating Leverage across both businesses. Bunnings' trading performance was described as reflecting the strength and resilience of its offer across a range of market conditions, while Kmart Group's higher earnings were supported by the value credentials of its Anko products and continued focus on operating efficiency and cost control.

Officeworks' earnings reflected one-off costs associated with a transformation program that commenced in the first half of FY26, which management said is expected to drive long-term earnings growth by transitioning the Business to a lower-cost operating model. Wesfarmers Health delivered higher earnings as its multi-year transformation gained momentum, supported by network sales growth in Priceline Pharmacy and improved Wholesale performance. Industrial and Safety's underlying earnings increased on higher sales and improved productivity in Blackwoods, with the Blackwoods and Workwear Group businesses transitioning to Bunnings Group effective 1 July 2026.

WesCEF Affected by Middle East Conflict and Odour Issues

WesCEF's earnings were affected by the timing of higher ammonia prices linked to the Middle East conflict, though the division benefited from positive operational performance and an improved contribution from its lithium business. Spodumene concentrate production of 209 kilotonnes exceeded both guidance and nameplate capacity. Ramp-up of the associated refinery was affected by intermittent odour issues throughout the year, with mitigation measures installed beginning in late FY26.

Operating cash flows for the Group decreased 6.5% to $4,272 million, which the company attributed to deliberate investments in working capital in WesCEF and Health, including higher spodumene inventories and additional fertiliser inventory purchased at elevated prices due to Supply disruptions from the Middle East conflict, as well as increased inventory contingency in Health to protect against supply chain disruptions. Cash realisation across the retail divisions remained at 99%, which the company said reflected disciplined working capital management.

Capital Management and FY27 Outlook

During the year, Wesfarmers paid a capital management distribution of $1.50 per share, totalling $1,703 million. As a result of the increase in underlying profit, the Board determined to pay a fully franked final dividend of $1.20 per share, bringing total fully franked ordinary dividends for the year to $2.22 per share, an increase of 7.8% on FY25's $2.06 per share. Group Total Recordable Injury Frequency Rate improved to 9.1 from 9.5, and Scope 1 and Scope 2 market-based emissions reduced 21.9%.

For FY27, the company said it expects net Capital Expenditure of between $1,300 million and $1,500 million, including approximately $200 million relating to the expansion of the Mt Holland mine and concentrator. Spodumene concentrate production at Mt Holland is expected to be in line with nameplate capacity of approximately 380 kilotonnes, with around half to be sold to market. For the first seven weeks of FY27, Bunnings' sales growth was described as slightly stronger than the second half of FY26, while Kmart Group's sales growth was in line with the prior half and Officeworks maintained positive, though slightly lower, sales growth. Borrowing costs are expected to be higher in FY27, reflecting higher net Debt and increased capital expenditure.

Conclusion

Wesfarmers' FY26 results reflect continued earnings growth on an underlying basis, led by Bunnings and Kmart Group, even as statutory profit and operating cash flows both declined year-on-year. The result illustrates the balance the company is managing between retail momentum, cost of living pressures affecting households, and one-off headwinds in WesCEF and Officeworks tied to external supply disruptions and transformation initiatives. With capital expenditure guidance rising for FY27 and the Mt Holland lithium project continuing its ramp-up, the company's near-term performance will be shaped by the pace of that ramp-up alongside broader retail trading conditions.

FAQs

Q: What was Wesfarmers' NPAT for FY26?

A: Statutory NPAT was $2,874 million, down 1.8% on FY25, while NPAT excluding significant items rose 8.3% to $2,874 million.

Q: Did Wesfarmers' operating cash flow increase in FY26?

A: No, operating cash flows fell 6.5% to $4,272 million, reflecting deliberate working capital investment in WesCEF and Health divisions.

Q: What dividend did Wesfarmers declare for FY26?

A: The Board declared a fully franked final dividend of $1.20 per share, bringing total fully franked ordinary dividends for the year to $2.22 per share, up 7.8% on FY25.

Q: Why was WesCEF's performance affected in FY26?

A: WesCEF's earnings were affected by the timing of higher ammonia prices linked to the Middle East conflict and intermittent odour issues affecting the ramp-up of its lithium refinery.

Q: What is Wesfarmers' capital expenditure guidance for FY27?

A: The company expects net capital expenditure of between $1,300 million and $1,500 million for FY27, including approximately $200 million relating to the Mt Holland mine and concentrator expansion.

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