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Highlights
- Wesfarmers revenue rose with a 3-year CAGR of 9.2%
- Bunnings continues to anchor strong operating profit
- Solid ROE of 30.3% in FY24 supports capital efficiency
The share price of Wesfarmers Ltd (ASX:WES) has surged by 19.63% since the beginning of 2025, capturing renewed investor attention. As one of Australia’s most diversified and longstanding conglomerates, Wesfarmers operates across multiple sectors—retail, chemicals, industrials, safety, and pharmaceuticals—through full ownership or substantial stakes in several high-profile businesses.
Diversified Business Backbone
Based in Perth, Wesfarmers is often likened to an investment holding company with a hands-on approach to building and refining its portfolio. A notable case in its corporate history was the acquisition and later demerger of Coles in 2018, following an 11-year ownership stint that enhanced the group's cash flow and market reach.
Currently, over half of Wesfarmers’ operating profit comes from Bunnings Warehouse, Australia's leading hardware and home improvement chain and the country’s most trusted brand in 2023 and 2024. Wesfarmers has controlled Bunnings since acquiring a full stake in 1994 for $594 million. Other key names under its banner include Kmart, Target, Priceline Pharmacy, Blackwoods, and Officeworks.
Financial Performance at a Glance
Wesfarmers reported an annual revenue of $44.2 billion with a three-year compound annual growth rate (CAGR) of 9.2%, signaling a healthy top-line trajectory. Its gross margin stands at 34.0%, indicating resilient profitability from its core operations even before factoring in overheads and administrative costs.
Net profit reached $2.56 billion in the most recent fiscal year, up from $2.38 billion three years ago. This equates to a 3-year profit CAGR of 2.4%, reflecting steady bottom-line expansion.
Financial Stability & Efficiency Metrics
The net debt of Wesfarmers sits at $10.44 billion, while its debt-to-equity ratio is at 131.4%. This level of leverage means the company operates with more debt than equity, a strategic choice that can amplify returns during periods of stable cash flows but also introduces higher financial risk.
On the efficiency front, Wesfarmers posted a return on equity (ROE) of 30.3% in FY24, demonstrating robust capital allocation and value creation for shareholders.
Wesfarmers (WES) continues to demonstrate financial strength, operational resilience, and effective capital deployment. Its well-recognized brands, strong margins, and consistent earnings profile position it as a significant player worth watching on the ASX.
