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Steady ship Wesfarmers lifts profit, dividend despite headwinds as languishing lithium books loss
The Rob Scott-led conglomerate booked steady rises in profit and revenue thanks to Bunnings and Kmart, but its new lithium business is already running at a loss due to poor timing in a grim market.
Wesfarmers turned a $2.56 billion profit for the 2024 financial year in a 3.7 per cent lift on the previous year, driven by revenues of $44.18 billion higher by about 1.5 per cent. Earnings before interest and tax grew 3.3 per cent.
Broadly Mr Scott said the business had been expecting “challenging year” with “numerous headwinds to navigate” including cost-of-living pressures on customers, higher business costs, subdued residential construction and volatile commodity markets.
Volatile markets were clear and present in Wesfarmers’ new lithium business Covalent Lithium — a joint venture with Chile’s Socíedad Quimica y Minera — which has already booked a $26m loss amid tanking prices for the battery metal.
“Due to subdued market pricing and the high unit cost of production as volumes ramp up, WesCEF’s lithium business contributed a loss of $26 million for the 2024 financial year.”
Wesfarmers’ share of Covalent produced 55,000 tonnes of spodumene from the Mt Holland mine for 2024 and sold 20,000 tonnes. The lithium hydroxide refinery in Kwinana is about 80 per cent complete and due to start production in 2025. Sales would start in 2026.
Revenue for its WesCEF business fell overall 19.6 per cent to $2.74b.
Mr Scott flagged Bunnings and Kmart Group as strong performers for the year.
The blue chip stock has declared a a fully-franked final dividend of $1.07 per share, bringing total dividends to $1.98 per share, 3.7 per cent higher on the prior year.
Looking ahead, Wesfarmers expects business cost pressures to continue and flagged sales were broadly steady in the first eight weeks of the year aside from Bunnings where growth had “moderated”.
Wesfarmers also said Australia needed to “address the shortages in Australian housing stock” to bolster building activity.
More to come.
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