30-May-2023: 2023 Strategy Briefing Day Presentation

View The Webcast: https://edge.media-server.com/mmc/p/6iyimda9

02-May-2023: Macquarie Australia Conference Presentation and Address by MD, Rob Scott

For all the latest WES results and presentations: Results & presentations (wesfarmers.com.au)

Today's 2023 Strategy Update (top link above) is long - at 104 slides - so I'm just going to reproduce the 4 that sum up this company best - in my opinion:

So this isn't your average microcap or nanocap stock that is largely under the radar and could go to zero or multibag. No, this one is a large cap that just keeps grinding higher over time. The best way to check how a company has looked after their shareholders is to look at their TSR - Total Shareholder Return - which include share price appreciation and dividends, and assumes that all dividends were reinvested back into the company using their DRP. In this case they also assume full participation in all of WES' capital management initiatives over the years.

Their TSR has well and truly outperformed the All Ordinaries Accumulation Index (XAO) which is represented there by that grey line. In fact, they've absolutely smashed it. Over that period, the All Ords Accumulation Index has performed almost identically to the ASX200 Accumulation Index (XJO). They both include reinvested dividends - that's the "accumulation" bit. Over shorter time periods there can be a little bit of divergence between the XAO and the XJO Indices, but they tend to have very similar returns to each other over decent time periods, like decades. WES, however, has done a LOT better than both of them.

Disclosure: I hold WES shares in real life and here on Strawman.com.

OK, one more slide:

How's this for a mission statement: Their primary objective is...

Tick.

20-Aug-2020:  Appendix 4E and 2020 Full-year Results   and   2020 Full-year Results Briefing Presentation   plus   Important Dates for Shareholders

Headline numbers:

• Revenue from continuing operations (A$m): 30,846, FY19: 27,920, +10.5%
• Profit after tax attributable to members:
  • From continuing operations excluding significant items (A$m): 2,083, FY19: 1,940, +7.4%
  • Significant items (A$m): (461), FY19: $0 
  • From continuing operations (A$m): 1,622, FY19: 1,940, (-16.4%)
  • From discontinued operations (A$m): 75, FY19: 3,570
• Net profit for the full-year attributable to members (A$m): 1,697, FY19: 5,510, (-69.2%)

Of course, WES spun out Coles Group (ASX: COL) during FY20, so they don't have all of that revenue from those 800 Coles Supermarkets, plus Coles Online, Coles Liquor (900 stores trading as Liquorland, Vintage Cellars, First Choice Liquor and First Choice Liquor Market and an online liquor retail offer), Coles Express (700 fuel/shop sites across Australia), flybuys (with over eight million active members, covering approximately six million households), Coles Financial Services (which provides insurance, credit cards and personal loans) and Spirit Hotels (which operates hotels in Queensland, Western Australia, South Australia and New South Wales).

WES still owns Bunnings Warehouse, Officeworks, KMart, Target, Catch.com.au, Geeks2u.com.au, plus Wesfarmers Chemicals, Energy & Fertilisers (WesCEF) which operates eight businesses in Australia and employs approximately 1,300 team members (including Kleenheat Gas, CSBP, Queensland Nitrates, EVOL LNG, Australian Vinyls, Australian Gold Reagents, Decipher and Covalent Lithium), plus Wesfarmers Industrial and Safety which operates four main businesses:  Blackwoods which distributes tools, safety gear, workwear and industrial supplies; Workwear Group which provide industrial and corporate workwear; Coregas a supplier of industrial specialty and medical gases; and Greencap, an integrated risk management and compliance company.

The main attractions for me (as a WES shareholder) are:

1. The conglomerate nature of the business where they will constantly evolve, much like a PE (private equity) firm, to take advantage of underpriced assets where they can add value and either keep them, sell them, or spin them out into a separate listed company.  The current pandemic is likely to present further opportunities to a cashed-up WES to pick up more quality assets at good prices.  In this respect they are in some ways similar to SOL (Washington H Soul Pattinsons) but also different, in that WES are more active with their asset portfolio turnover, and they also offloaded their coal assets early when the writing was first up on the wall, whereas Robert Milner at SOL is still stubbornly holding on to NHC (New Hope Coal) and is a climate change sceptic (he believes in climate change but that humans have very little to do with it).  In that respect I view WES as much more pragmatic, entrepreneurial and investable, not to mention better managed by smarter people.
2. Bunnings and Officeworks - the two jewels in the Wesfarmers crown.  The absolute best in their respective fields.  Loyal customers, and great businesses.
3. Wesfarmers expansion into battery metals, starting with lithium.  They also had a crack at buying Lynas (LYC) - for their rare earths - when the LYC share price was substantially lower - and they are rumoured to be looking closely at battery-grade nickel producers like WSA and/or IGO  (I currently hold shares in IGO, and do occasionally trade WSA shares but don't hold WSA at this point in time).  Matt Haupt, the lead PM at WLE (the WAM Leaders Fund) believes that WES want to build an integrated battery metals supply chain company and that they will not rush into purchases, but will follow their usual MO and buy quality assets at good prices when the opportunities present themselves.  In other words, it could take a few years, but we could end up with a very different looking Wesfarmers in the future that could be clearly facing the EV and clean-energy-storage markets as a one-stop-shop for battery metals and ingredients.

So, yes, I am a WES shareholder.

Further Reading:  https://www.wesfarmers.com.au/our-businesses/our-businesses

04-Aug-2020:  COVID-19 update - Trading restrictions in Victoria

[I hold WES shares]

09-June-2020:  Retail trading update

Overview:  Total sales growth by division from H2 to date:  Bunnings up 19.2%, Kmart up 4.1%, Target down 1.8%, Catch (GTV) up 68.7%, Officeworks up 27.8%.  In the calendar year to date, the group's retail businesses delivered total online sales growth of 89%.  Financial year to date total online sales across the group increased 60% to $1.9bn including Catch.

Disclosure:  I hold WES shares.

22-May-2020:  Kmart Group update and expected FY20 significant items

Kmart Group update

• First phase of Target review has identified actions to accelerate the growth of Kmart and address the unsustainable financial performance of Target
• Actions include the conversion of suitable Target stores to Kmart stores, the closure of a number of Target stores and a restructuring of the Target store support office
• Redeployment opportunities in Kmart and other Wesfarmers businesses will minimise the effect of these changes on Target team members

Significant items expected in the 2020 full-year results

• Restructuring costs and provisions in Kmart Group of approximately $120 to $170 million before tax, primarily reflecting Target store closure costs, inventory write-offs and a restructure of the Target store support office  
• Non-cash impairment in Kmart Group of approximately $430 to $480 million before tax, including an impairment of the Target brand name
• Non-cash impairment in the Industrial and Safety division of approximately $300 million before tax, primarily relating to the impairment of goodwill
• Pre-tax gain on sale of 10.1 per cent interest in Coles of $290 million, and one-off pre-tax gain of $221 million on the revaluation of the remaining Coles investment  
• The estimates of the significant items remain subject to auditor review

[...click on link above for further details...]

Disclosure:  I hold WES shares.

07-May-2020:  Macquarie Conference Briefing Presentation

That is a link to a copy of the presentation that is to be given today at the Macquarie Australia Conference today.  The presentation outlines Wesfarmers’ priorities and response to current market conditions.  It also includes an update on the Group’s trading performance in line with Wesfarmers’ announcement on 28 April 2020 and an update on the Group’s balance sheet position.  [28-Apr-2020:  COVID-19 update]

28-Apr-2020:  COVID-19 update

31-Mar-2020:  WES: Wesfarmers sells 5.2 per cent of Coles Group

Also:  COL: Sale by Wesfarmers of 5.2 per cent of Coles Group

Following the sale, Wesfarmers retains a 4.9 per cent interest in Coles and has agreed to retain its remaining shares in Coles for at least 60 days from today.

COL & WES also remain 50/50 JV partners in Flybuys and will continue to work together.

Wednesday 19th Feb 2020:  The following have all been released by WES (Wesfarmers) to the ASX announcements platform today:

2020 Half-year Results

2020 Half-Year Report (including Appendix 4D)

2020 Half-year Results Briefing Presentation

Wesfarmers sells 4.9 per cent of Coles Group for $1.05 billion

Disclosure:  I hold WES shares.  I like the exposure to Bunnings, Officeworks, Wesfarmers' natural gas and agricultural chemicals/fertilisers businesses, as well as their new foray into battery metals miners and their plans to develop a battery metals supply chain business.