Wesfarmers focused on delivering "win-win" for consumers and shareholders

While we all know of BHP as the ‘Big Australian’, as a sandgroper, I’ve always thought proudly of Wesfarmers as the ‘Big West-Australian’. One of my most vivid memories as a kid is stumbling across my grandparents' (who were farmers) old Wesfarmers share certificate. So, I was naturally excited to get the assignment to interview CEO Rob Scott to discuss the company’s first-half results.

Scott is only the eighth CEO of a company with over 100 years of history. He’s had to steer the company through what is arguably one of the greatest exogeneous threats over that time in the form of the COVID-19 pandemic. Looking at the company’s latest results, it’s clear Wesfarmers has emerged from the pandemic in very strong shape.

With businesses across hardware, consumer goods, pharmacy, healthcare, mining, chemicals, energy, and fertilisers, Wesfamers is one of the few remaining conglomerates. Bunnings near-$10 billion in revenue and $1.34 billion in earnings again underpinned a modest 3% increase in group earnings, slightly ahead of market expectations. Kmart was perhaps the highlight, though, delivering 7.8% sales growth in a tough retail environment.

If there were misses, it was in businesses subject to the whims of the commodity price cycle. Wesfarmers recent foray into lithium, the Mt Holland project, has come in over budget, and WesCEF saw markedly lower earnings due to falling ammonia prices.

In the following interview, Mr. Scott discusses what he felt were the strongest and weakest points of the first half results, as well as some very interesting views on whether opportunities are presenting themselves in beaten-down ASX lithium stocks. 

“I think it’s much better to buy a business when everyone is incredibly fearful and panicking, and doesn’t have access to capital”, Scott says.

Note: This interview was recorded on February 15, 2024. 

Time codes

• 0:20 - Results overview
• 1:00 - Reasons for Wesfarmer's retail brands outperfoming in challenging environment
• 2:10 - Current state of Wesfarmers' supply chain, strategies for tackling ongoing issues
• 4:10 - How Wesfarmers is balancing shareholder returns against cost of living crisis
• 5:35 - The pharmacies businesses and navigating competition
• 7:15 - Lithium project progress, outlook for sector
• 8:10 - Intentions in green energy and future metals
• 9:05 Is Wesfarmers considering acquisitions in ASX-listed lithium producers?
• 10:10 - Underperformance in WesCEF and segment outlook