“Our businesses have once again executed well, led by our two largest divisions, Bunnings and Kmart Group, and we’re very conscious that the valuation of Wesfarmers is very much underpinned by these larger businesses,” Scott said.
“In recent years, our divisions have proactively driven many productivity measures, many linked to technology and supported by better data insights.
“This half, some of these strategies included the integration of systems across Kmart and Target, better-using technology to reduce back office costs, and providing digital tools to help our team members and improve workplace safety.”
The Bunnings division, including the Australian and New Zealand operations, reported first-half total revenue of A$10.28b, up 3.2% from A$9.96b in the previous period.
The Kmart division reported total revenue of A$6.1b, up 2% from A$5.9b.
New Zealand update
While the interim result shed no financial detail on the group’s New Zealand operations, Wesfarmers chief financial officer Anthony Gianotti said New Zealand operations are starting to see the benefit from several OCR rate cuts.
“Of course the 50 basis point cut that came through yesterday is certainly a welcome relief,” Gianotti said.
“I think we’re still seeing the New Zealand economy doing a little bit tougher, certainly when I compare the position in New Zealand to what we’re seeing in Australia. We are seeing a bit of a glimmer of hope across our B2B customers, particularly in industrial and safety.”
For the year ahead in New Zealand, Gianotti said it will be a “little bit tougher” to maintain revenue and profit growth in FY25.
“Certainly, we’ve got quite strong aspirations to continue to grow in the New Zealand market, and we’ve got a product offer that’s really resonating with value-based consumers, which is what we’re seeing.
“So yes, we’re very much on track with what we’ve got planned in that market for this year.”
Scott said the group’s retail businesses had maintained their sales momentum into the new year, with rate cuts in Australia and New Zealand providing much-needed relief.
However, he said that Australia is not “economically out of the woods yet”, the sentiment likely extending across the Tasman.
“Cost challenges remain, especially in a low productivity environment, and the lower Australian dollar also could create some cost pressure in the year ahead. There are also clearly a number of geopolitical issues that do create some uncertainty in the outlook.”
Scott also confirmed that while potential tariffs by US President Donald Trump are causing uncertainty, “it’s not clear that any of the tariffs that have been proposed would directly impact our businesses, but there are always the second-order impacts.”
In their last annual reports, Kmart and Bunnings' New Zealand operations both reported profit growth.
Kmart NZ reported revenue of $999.5m, with a net profit after tax of $106m.
Bunnings NZ reported a drop in revenue of roughly $10m to $1.76b, but still earned a net profit after tax of $79m.
Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.
