Wesfarmers Reports $1.6 Billion NPAT, Dividend Rises 7.4% Amid Cost Pressures

Solid Half-Year Performance Amid Market Challenges

Wesfarmers Limited has delivered a commendable half-year result for the six months ending 31 December 2025, reporting a statutory net profit after tax (NPAT) of $1,603 million, marking a 9.3% increase compared to the previous corresponding period. This growth reflects the company’s disciplined execution of its strategies and strong operational performance across its key divisions.

Managing Director Rob Scott highlighted that the profit uplift was primarily supported by the retail giants within the group, Bunnings and Kmart Group, as well as the WesCEF division, which includes the lithium business. Despite a backdrop of subdued residential construction and ongoing cost pressures impacting consumers and businesses alike, Wesfarmers’ divisions successfully implemented productivity initiatives to maintain competitive pricing and operational leverage.

Retail Divisions Drive Growth and Efficiency

Bunnings demonstrated resilience with sales growth across all product categories and customer segments, reinforcing its market-leading position. Kmart Group also posted increased earnings, buoyed by the popularity of its Anko product range and a strong focus on cost control, although Target faced tougher trading conditions in apparel, particularly seasonal lines.

Officeworks, while impacted by transformation program costs, remains on track to transition to a more efficient, low-cost operating model. Meanwhile, Wesfarmers Health showed promising momentum, with Priceline Pharmacy expanding its network sales and Wholesale operations improving despite a competitive environment.

Lithium Refinery Progress and Operational Nuances

WesCEF’s lithium business contributed positively, supported by strong mine and concentrator performance and improved pricing. The Covalent Lithium joint venture’s refinery commissioning was completed below budget and is producing high-quality lithium hydroxide. However, the ramp-up phase has been extended to address intermittent odour issues, with excess spodumene concentrate being profitably sold in the interim. The company expects lithium earnings in the second half of the year to slightly exceed the first half.

Strategic Embrace of AI and Sustainability Gains

Wesfarmers is accelerating its digital transformation through increased AI adoption, focusing on enhancing customer experience, team productivity, and long-term earnings growth. Partnerships with Microsoft and Google Cloud aim to fast-track AI integration across merchandising, marketing, contact centres, and supply chain operations.

On the sustainability front, the group reported a 27.8% reduction in Scope 1 and 2 emissions, driven by retail divisions achieving 100% renewable electricity targets. Safety metrics also improved, reflecting ongoing commitment to workplace wellbeing.

Outlook and Capital Management

Looking ahead, Wesfarmers remains cautiously optimistic. While consumer demand is solid, inflationary pressures and recent interest rate hikes are weighing on sentiment. The company plans to continue leveraging its strong retail brands and digital capabilities to drive growth, maintaining cost discipline amid higher operating expenses.

Capital expenditure guidance for the full year is set between $1 billion and $1.3 billion, excluding proceeds from recent property sale and leaseback transactions. The Board has declared a fully-franked interim dividend of $1.02 per share, up 7.4%, reflecting confidence in the group’s financial strength and growth prospects.