BUS 111 PESTEL, Porter’s Five Forces, and VRIN frameworks

Using your skills in analysis of the organisation’s external and internal environments, you will use PESTEL, Porter’s Five Forces, and VRIN frameworks to analyse a specific Business within the Wesfarmers Corporation. requirement detail is in the document.

2023 Annual
Report
About Wesfarmers
About this report
From its origins in 1914 as a Western
Australian farmers’ cooperative,
Wesfarmers has grown into one of
Australia’s largest listed companies.
With headquarters in Perth, Wesfarmers’
diverse businesses today span: home
improvement, outdoor living products and
supply of building materials; general
merchandise and apparel; office and
technology products; health, beauty and
wellbeing products and services;
management of a retail subscription
program and shared data asset; wholesale
distribution of pharmaceutical goods;
manufacturing and distribution of chemicals
and fertilisers; development of an
integrated lithium project, including mine,
concentrator and refinery; industrial and
safety product distribution; gas processing
and distribution; and management of the
Group’s investments.
This annual report is a summary of
Wesfarmers and its subsidiary companies’
operations, activities and financial
performance and position for the year
ending and as at 30 June 2023. In this
report, references to ‘Wesfarmers’,
‘the company’, ‘the Group’, ‘we’,
‘us’ and ‘our’ refer to Wesfarmers
Limited (ABN 28 008 984 049), unless
otherwise stated.
Wesfarmers is one of Australia’s largest
private sector employers with approximately
120,000 team members and is owned by
more than 510,000 shareholders.
References in this report to a ‘year’ or
‘this year’ are to the financial year ended
30 June 2023 (previous corresponding
period to 30 June 2022) unless otherwise
stated. All dollar figures are Australian
dollars (AUD) unless otherwise stated.
References to ‘AASB’ refer to the
Australian Accounting Standards Board
and ‘IFRS’ refers to the International
Financial Reporting Standards. There are
references to ‘IFRS’ and ‘non-IFRS’
financial information in this report.
Non-IFRS financial measures are financial
measures other than those defined or
specified under any relevant accounting
standard and may not be directly
comparable with other companies’
information. Non-IFRS financial measures
are used to enhance the comparability
of information between reporting periods.
Non-IFRS financial information should
be considered in addition to, and is not
intended to be a substitute for, IFRS
financial information and measures.
Non-IFRS financial measures are not
subject to audit or review.
All references to ‘Indigenous’ people
are intended to include Aboriginal and/or
Torres Strait Islander people.
References to Scope 1 and 2 data include
emissions for businesses where we have
operational control under the National
Greenhouse and Energy Reporting Act
2007 (Cth) (NGER Act) and emissions in
international operations. Scope 2
emissions are stated using market-based
accounting, in accordance with the World
Resource Institute’s Greenhouse Gas
Protocol Scope 2 guidance.
References to community contributions
include direct community contributions
from divisions (cash, in-kind and time) and
indirect community contributions (from
team members and customers).
Wesfarmers is committed to reducing
the environmental footprint associated
with the production of this annual report
and printed copies are only posted to
shareholders who have elected to receive
a printed copy. This report is printed
on environmentally responsible paper
manufactured under ISO 14001
environmental standards.
Appendix 4E
For the year ended 30 June 2023
Results for announcement to the market1
2023
2022
Revenue from ordinary activities
Up 18.2% to $43,550 million
$36,838 million
Revenue from ordinary activities – excluding Wesfarmers Health2
Up 7.4% to $38,238 million
$35,598 million
Profit from ordinary activities after tax attributable to members
Up 4.8% to $2,465 million
$2,352 million
Net profit for the period attributable to members
Up 4.8% to $2,465 million
$2,352 million
Net tangible assets per share3
$3.17
$2.91
Operating cash flow per share4
$3.69
$2.03
Commentary on the results for the year is included in this report and on the Wesfarmers website.
2 Wesfarmers, through its wholly-owned subsidiary WFM Investments Pty Ltd, completed the acquisition of Australian Pharmaceutical Industries Ltd (API)
on 31 March 2022, forming the Wesfarmers Health division. The results of Wesfarmers Health presented in this report for 2022 are for the period from
31 March 2022 to 30 June 2022.
3 Net tangible assets per ordinary share (excluding reserved shares) calculation includes right-of-use assets and lease liabilities. 2022 has been restated to
reflect the adjustments to the provisional acquisition accounting for API.
4 Operating cash flow per share has been calculated by dividing the net cash flows from operating activities by the weighted average number of ordinary
shares (including reserved shares) on issue during the year.
1
Dividends
Amount per security
Franked amount per security
Interim dividend
88 cents
88 cents
Final dividend
103 cents
103 cents
Total FY2023 dividend
191 cents
191 cents
Interim dividend
80 cents
80 cents
Final dividend
100 cents
100 cents
Total FY2022 dividend
180 cents
180 cents
Record date for determining entitlements to the final dividend
5:00pm (AWST) on 31 August 2023
Last date for receipt of election notice for the Dividend Investment Plan
5:00pm (AWST) on 1 September 2023
Date the final dividend is payable
5 October 2023
Previous corresponding period:
Acknowledgement
of Country
Wesfarmers proudly acknowledges
the Traditional Owners of Country
throughout Australia and their continuing
connection to lands and waterways
upon which we depend and where
our businesses operate. We pay
our respects to their Elders, past
and present.
Recognising its potential to advance
social, economic and cultural equity
for Aboriginal and Torres Strait Islander
Australians, Wesfarmers supports the
Uluru Statement from the Heart including
the proposal to establish an Aboriginal
and Torres Strait Islander Voice.
Contents
Overview
Operating
and financial
review
The Wesfarmers Way
2
Our businesses
4
Our performance
6
Performance overview
8
Chairman’s message
10
Managing Director’s report
12
Leadership Team
14
Operating and financial review
16
Bunnings Group
22
Kmart Group
30
Chemicals, Energy and Fertilisers
36
Officeworks
42
Industrial and Safety
48
Wesfarmers Health
54
Wesfarmers OneDigital
60
Catch
62
Other activities
64
Sustainability
65
Climate-related disclosures
75
Independent Limited Assurance Statement 87
Governance
Board of Directors
88
Corporate governance overview
90
Directors’
report
Directors’ report
95
Remuneration report
100
Financial
statements
Financial statements
131
Notes to the financial statements
137
Signed
reports
Directors’ declaration
179
Independent auditor’s report
180
Shareholder
and ASX
information
Five-year financial performance
and key metrics
184
Shareholder information
187
Investor information
188
Corporate directory
189
Overview
The
Wesfarmers Way
Our primary objective is to deliver a satisfactory
return to shareholders. We believe it is only possible
to achieve this over the long term by —
Anticipating the needs of
our customers and
delivering competitive
goods and services
Looking after our team
members and providing
a safe, fulfilling work
environment
Engaging fairly with our
suppliers, and sourcing
ethically and sustainably
Supporting
the communities
in which we operate
Taking care of
the environment
Acting with integrity
and honesty in all of
our dealings
2
Wesfarmers 2023 Annual Report
Overview
Value-creating strategies
The Group’s primary objective is driven
by four overarching strategies.
Operating excellence
Entrepreneurial initiative
– Strengthening existing businesses
through operating excellence and
satisfying customer needs
– Securing growth opportunities through
entrepreneurial initiative
Renewing the portfolio
Operating sustainably
– Renewing the portfolio through
value-adding transactions
– Ensuring sustainability through
responsible long-term management
Core values
Our core values underpin all of the Group’s
strategies and ways of working.
Integrity
Accountability
– Acting honestly and ethically in all dealings
– Decision-making authority in divisions
– Reinforcing a culture of doing what is right
– Accountability for performance
– Protecting and enhancing reputation
Openness
Entrepreneurial spirit
– Openness and honesty in reporting,
feedback and ideas
– Adopting an owner mindset
– Accepting that people make mistakes and
seeking to learn from them
– Encouraging teams to identify opportunities
and apply commercial and financial acumen
to support calculated risk-taking
– Encouraging teams to take initiative
and pursue new and innovative ways of
delivering value
Wesfarmers 2023 Annual Report
3
Overview
Our
businesses
Bunnings Group
Bunnings Group is the leading retailer of home improvement and
outdoor living and building products in Australia and New Zealand.
Bunnings’ network of 513 locations includes warehouses, trade
centres, Tool Kit Depot stores and Beaumont Tile stores. Bunnings
Group employs more than 52,000 team members.
Kmart Group
Kmart Group comprises Kmart and Target and operates 449 stores
across Australia and New Zealand, employing around 50,000 team
members in Australia, New Zealand and key sourcing markets.
Chemicals, Energy
and Fertilisers
Chemicals, Energy and Fertilisers manages nine businesses in
Australia and employs almost 1,500 team members across its
production and distribution facilities and support offices.
Officeworks
Officeworks is Australia’s leading retailer and supplier of office
products and solutions for small and medium-size businesses,
students and households, operating through a nationwide network of
166 stores. Officeworks employs more than 9,000 team members.
4
Wesfarmers 2023 Annual Report
Overview
Industrial
and Safety
Industrial and Safety operates three main businesses spanning
safety products, industrial and corporate workwear, and industrial
and medical gases. Industrial and Safety employs approximately
3,600 team members.
Health
The Health division was formed in March 2022, with the acquisition of
API, one of Australia’s leading health and beauty companies. The Health
division includes 76 company-owned Priceline stores, 390 Priceline
pharmacy franchise stores and 92 Clear Skincare clinics and is also a
wholesale distributor of pharmaceutical goods. The division employs
more than 3,000 team members.
from July 2023
OneDigital
Established in 2022, OneDigital brings together the Group’s digitally
native businesses, including the OnePass membership program, the
Catch marketplace, and the Group data asset. OneDigital powers the
Group’s data and digital growth ambitions and provides customers
with a more seamless, rewarding and valuable omnichannel experience
across the Group’s retail businesses. The division employs about
600 team members.
Other activities
Wesfarmers is an investor in Flybuys, the BWP Trust, Gresham Partners
and Wespine Industries.
50%
24.8%
50%
50%
Wesfarmers 2023 Annual Report
5
Overview
Our
performance
Revenue
Net profit after tax
$43.5b
$2.5b
Dividends per share
Fully franked
$1.91
up 18.2%
up 4.8%
up 6.1%
Return on equity (R12)
Salaries, wages and
other benefits
Government taxes
and other charges
31.4%
$6.0b
$1.4b
Well-placed portfolio of businesses with exposure to growth
Strong, value-based
retail offers focused on
everyday products
Strategic manufacturing
capabilities supporting
critical industries
Health division
providing exposure to
growing sectors
Opportunities to
contribute to global
decarbonisation
Underpinned by a strong balance sheet to support disciplined,
long-term investment, and data and digital capabilities that
enable further productivity and efficiency gains
6
Wesfarmers 2023 Annual Report
Overview
Focus on long-term sustainable value, consistent with our objective
People
Environment
Communities
11.3
total recordable injury frequency
rate, up 23% from 9.2 in FY2022
2.4%
decrease in Scope 1 and Scope 2
market-based emissions
15.5%
3.3%
37MW
$75m
of Wesfarmers’
Australian
workforce
Indigenous employment
maintaining population
parity
48%
Board and Leadership Team
positions held by women
capacity from 165 rooftop
solar systems, with 43 installed
during the year
of Australian team members
undertook cultural awareness
training
in direct and indirect
contributions, largely to
community organisations in
Australia and New Zealand
71.6%
of operational waste recovered,
and diverted away from landfill
Wesfarmers 2023 Annual Report
7
Overview
Performance
overview
Wealth creation and value distribution
$28.9b to suppliers for raw
materials and inventory
$6.0b to team members (salaries, wages and other benefits)
$1.4b to government (taxes and other charges)
Wealth creation
Value distribution
1
$43.7b
$10.6b
$4.2b for rent, freight, services
$0.1b to lenders (finance costs)
$2.2b to shareholders (FY2023 dividends)
$0.9b reinvested in the business
and other external expenses
1
Represents revenue, other income and share of net profits of associates and joint ventures.
Group performance
Financial results
2023
2022
Revenue
$m
43,550
36,838
Earnings before interest and tax
$m
3,863
3,633
Earnings before interest and tax (after interest on lease liabilities)
$m
3,644
3,416
Net profit after tax
$m
2,465
2,352
Basic earnings per share
cents
217.8
207.8
Cash flow and dividends
Operating cash flows
$m
4,179
2,301
Net capital expenditure
$m
1,183
884
Acquisition of subsidiaries, net of cash acquired
$m
24
773
Free cash flows
$m
3,627
1,110
Equity dividends paid
$m
2,132
1,927
Capital return paid
$m
–
2,267
Operating cash flow per share
cents
369.2
203.3
Dividends per share
cents
191
180
Balance sheet and gearing
1
Total assets
$m
26,546
27,286
Net debt2
$m
4,009
4,491
Shareholders’ equity
$m
8,281
7,981
Gearing (net debt to equity)
%
48.4
56.3
ktCO2e
1,196.7
1,225.7
%
71.6
69.6
3,689
3,601
TRIFR
11.3
9.2
% women
48
48
Sustainability
Scope 1 and Scope 2 market-based emissions
Operational waste recovered and diverted from landfill3
Aboriginal and Torres Strait Islander team members3
Safety performance3
Gender balance, board and leadership team
2022 has been restated to reflect the adjustments to the provisional acquisition accounting for API.
Interest-bearing loans and borrowings less cash at bank and on deposit and held in joint operation. Excludes lease liabilities.
3 2022 excludes Wesfarmers Health.
1
2
8
Wesfarmers 2023 Annual Report
Overview
Divisional performance
2023
2022
Revenue
Bunnings Group
$m
18,539
17,754
Earnings before tax
$m
2,230
2,204
Segment assets
$m
8,900
8,817
Segment liabilities
$m
5,593
6,113
Capital employed R12
$m
3,410
2,854
Return on capital employed R12
%
65.4
77.2
Cash capital expenditure
$m
405
349
2023
2022
Revenue
$m
Earnings before tax
$m
Segment assets
$m
Segment liabilities
$m
Capital employed R12
9,129
505
5,848
4,267
1,569
32.2
105
Kmart Group1
$m
10,635
769
5,582
4,359
1,635
Return on capital employed R12
%
47.0
Cash capital expenditure
$m
127
2023
2022
Revenue
$m
Earnings before tax
$m
Segment assets
$m
Segment liabilities
$m
Capital employed R12
3,041
540
3,627
771
2,503
21.6
455
Chemicals, Energy and Fertilisers
$m
3,306
669
3,811
594
3,091
Return on capital employed R12
%
21.6
Cash capital expenditure
$m
518
2023
2022
Revenue
$m
Earnings before tax
$m
Segment assets
$m
Segment liabilities
$m
Capital employed R12
3,169
181
2,040
1,041
1,015
17.8
68
Officeworks
$m
3,357
200
2,141
1,129
1,092
Return on capital employed R12
%
18.3
Cash capital expenditure
$m
71
2023
2022
Revenue
$m
Earnings before tax
$m
Segment assets
$m
Segment liabilities
$m
Capital employed R12
1,925
92
1,805
599
1,166
7.9
64
Industrial and Safety
$m
1,992
100
1,787
474
1,257
Return on capital employed R12
%
8.0
Cash capital expenditure
$m
73
2023
2022
Revenue
$m
5,312
Earnings before tax
$m
45
Segment assets
$m
2,088
Segment liabilities
$m
908
Capital employed R12
$m
1,078
Return on capital employed R12
%
4.2
Cash capital expenditure
$m
41
1,240
(25)
2,037
951
n.r.
n.r.
3
2023
2022
354
(163)
209
110
10
510
(88)
271
106
45
Health2
Catch
Revenue
$m
Earnings before tax
$m
Segment assets
$m
Segment liabilities
$m
Cash capital expenditure
$m
2022 has been restated to exclude Catch.
2 2022 includes API’s results from 31 March 2022 to 30 June 2022. 2022 has been restated to reflect the adjustments to the provisional acquisition
accounting for API.
1
Wesfarmers 2023 Annual Report
9
Overview
Chairman’s
message
It is pleasing to report that in a year
marked by significant uncertainty, both
nationally and internationally, Wesfarmers
continued to perform well and provide
good returns to its shareholders.
The Group recorded a net profit after tax
for the 2023 financial year of $2.5 billion,
up five per cent on the previous year. The
directors declared fully-franked dividends
totalling $1.91 per share, comprising an
88 cent interim and a $1.03 final dividend.
This compares with total dividends in the
previous year of $1.80 per share.
As described more fully in the Managing
Director’s report, the strong result arose
from increased earnings in our retail,
chemicals and industrial operations. We
continued to progress significant digital
and data investments – expenditures
which reduce the bottom line but are
essential to the company’s future
success.
It would be no exaggeration to say that
the past three years have been
characterised by more uncertainty than
in any similar period over recent
decades. Consumer demand has been
both unpredictable and volatile, as the
COVID-19 pandemic progressed through
different phases, and as very low interest
rates, designed to counter potential
10
Wesfarmers 2023 Annual Report
economic slowdowns, rapidly increased
to higher levels, in response to
inflationary pressures.
Against this backdrop, it is pleasing
that the positioning of Wesfarmers’
businesses together with good efforts by
management have resulted in continued
resilience in our sales. As interest rate
rises took hold, consumers moved
towards lower-priced products and our
Kmart business, for example, was
strongly supported.
A key to operating successfully,
regardless of the external environment,
has been engaging in constant
innovation; and we have seen many
examples in the Group. Apart from rolling
out new stores, Bunnings has expanded
its ranges – in tiles, specialist tools and,
most recently, pet products. Kmart has
focused on expanding its high-quality,
low-priced Anko ranges and converted
a number of Target stores to its brand.
Officeworks has become a leading
retailer of technology products. At a
portfolio level, we have moved into the
lithium and healthcare industries.
The Wesfarmers of today is very different
to the Wesfarmers of a decade ago and,
in fact, of every decade since we listed
on the stock exchange in 1984. That has
undoubtedly resulted from the fact that
we are driven by our single objective to
provide a satisfactory return to
shareholders – an objective that focuses
our strategies on shareholder wealth
creation rather than empire building.
Fundamental to achieving the objective
has been looking after the interests of
our stakeholders – a subject I’ll return
to later in this letter.
A company’s prosperity is obviously a
function of the decisions made by its
management and board, but also of the
environment in which it operates. A
prosperous country enables prosperity
amongst its citizens and organisations
of all types. In this regard, we share the
concern expressed by others about
whether Australia is doing all it must,
to maintain its advantaged place in
the world.
Of specific concern is the question of
the country’s weak productivity growth,
without which our standard of living and
capacity to provide the social services
and infrastructure that Australians
expect, will be threatened. Policies and
actions by the Federal Government have
a major influence on this issue and some
of the industrial relations changes made
and proposed are concerning in this
regard. Some seem to have been
designed to address specific issues,
Overview
where there is no apparent cause for
concern and without an appreciation of
potential negative, wider implications and
consequences.
One example is the proposed ‘same job,
same pay’ legislation. A concept like this,
which on the face of it seems fair, may in
practice have detrimental outcomes for
both employees and businesses. It is
important to understand that the proposal
is not about equal pay for men and
women. It focuses on labour hire and
contract workers who are essential and
widely used by governments and private
sector businesses, including to meet
cyclical or seasonal needs, changes in
economic conditions and to access the
specialised skills that they require from
time to time.
The problems with the proposal include
the likely inequity of the outcome and
the potential complexity that would
accompany its implementation. Based
on the information provided to date,
employees with more experience would
get paid the same as those with less
skills and knowledge. The significant
resources required to oversee and
administer such a scheme may also
cause small operators to become
unviable and constrain the expansion
of larger businesses, detrimentally
affecting employment, productivity
and competitiveness on a domestic
or global scale.
Similar problems arise with the
Government’s proposals regarding
casual employment. The devil is in the
detail, but it is unclear what problem is
being addressed. The changes may
impact not just productivity, but also
workers themselves, including young
people and individuals with caring
responsibilities who value the flexibility to
accept the shifts that suit their personal
commitments and higher hourly rates
associated with casual work.
Our hope would be that in contemplating
changes like those described,
governments would engage deeply with
business and others, to assess the
potential wider effects and unintended
consequences of their proposals, and
apply a long-term productivityimprovement overlay, knowing its
importance for national prosperity.
Productivity is also critical to our
international competitiveness in a world
where global market dynamics and
regional instabilities can affect the
operations of our businesses and demand
for their products and services. What
happens in economies offshore is
obviously outside our control but one
action we can take is to make sure we
continue to have a strong balance sheet.
Combined with maintaining strong
disciplines in our investment activities, this
should ensure that the company continues
to prosper in good times and bad.
In recent times, there has been some
public commentary on the question of
companies focusing on environment,
social and governance (ESG) matters,
rather than on shareholder wealth
creation. Of course, many ESG initiatives
and reporting on them are now mandated
by governments, stock exchange listing
rules and emerging international reporting
standards, but regardless of that, we do
not see any conflict between looking after
the interests of our shareholders and those
of our other stakeholders. You can’t
achieve the former without doing the latter.
Wesfarmers has historically been one of
the largest contributors to community
organisations, ranging across health,
education, Indigenous welfare and the
arts. Our businesses are also active
supporters of their local communities. It is
no coincidence, in our view, that we have
also been one of the most successful
financially. The two go hand in hand.
In closing, on behalf of the Board
I convey our thanks to Vicki Robinson,
our Company Secretary, who retires at
this year’s Annual General Meeting. Vicki
has provided outstanding professional
service to the company and Board over
her 20 years of service in legal affairs,
our businesses and governance.
I also acknowledge with gratitude the
efforts of the around 120,000 people
employed in our Group. We thank our
management team led so ably by Chief
Executive, Rob Scott, for their dedication
to the company and its welfare.
We look forward to continuing the
success of the company in the years
ahead.
Wesfarmers has set out its position on
these issues on many occasions but it is
worth summarising them again here.
As a publicly-listed company we have
one objective: to provide a satisfactory
return to our shareholders. Why?
Because that is why people buy and
hold our shares: with the aim of earning
superior returns. Since our listing,
however, we have consistently stated
that we aim to achieve satisfactory
returns by looking after our employees,
providing attractively-priced, quality
products to our customers, dealing
fairly with our suppliers, protecting the
environment and supporting the
communities in which we operate.
Michael Chaney AO
Chairman
All of those stakeholder-orientated
strategies are essential ingredients for
long-term shareholder wealth creation.
If done well, we’ll be seen as an ethical
company; good people will want to work
for us, customers will buy our products,
suppliers will trust us to pay them on time,
other companies will want to work with
us, and communities and governments
will see us as a company worth
supporting in our growth ambitions.
Wesfarmers 2023 Annual Report
11
Overview
Managing
Director’s report
It’s my pleasure to present this update on
Wesfarmers’ performance for the 2023
financial year.
Wesfarmers’ strong results for the year
demonstrate the strength of our operating
model and the quality of the Group’s
portfolio. During the year, we maintained
our focus on long-term shareholder
returns by driving operating excellence,
securing new growth opportunities,
renewing the portfolio and progressing
our sustainability agenda.
Our businesses continue to respond well
to the challenges and opportunities
presented by changing market conditions.
While this was the first year since the 2019
financial year without interruptions from
COVID-19, rising inflation and changes in
economic conditions necessitated various
operational responses.
As previously reported, Wesfarmers has
been investing in technology and new
business processes to enhance
productivity and create new platforms
for growth. The application of artificial
intelligence (AI) and predictive analytics
continues to develop across our retail
operations and is supporting the delivery
of productivity benefits. This enabled our
businesses to maintain momentum and
performance, which is critical to our future
success in competitive markets.
12
Wesfarmers 2023 Annual Report
To support satisfactory returns to
shareholders over the long term, we
understand the importance of anticipating
customer needs, looking after our team
members, collaborating with suppliers,
investing in our local communities and
looking after the environment. What was
good last year won’t be good enough in
the future, and our relentless focus on
improvement creates future value for
our stakeholders.
During the year, our retail and health
businesses reinforced their strong
value credentials, at a time when
households and businesses were
focused on balancing their budgets.
They also expanded into new
categories and markets, providing
opportunities for growth.
Our industrial businesses play a critical
role supporting some of Australia’s key
export industries, and their reliability and
efficiency has delivered another year of
growth. Good progress has been made
with the development of the
Covalent lithium project, which provides
another growth platform for our
Wesfarmers Chemicals, Energy &
Fertilisers (WesCEF) division.
Wesfarmers maintained its commitment
to providing a safe and fulfilling work
environment for team members, and
improvements in safety results were
recorded across most businesses. At a
Group level, TRIFR increased to 11.3, largely
attributable to Bunnings where TRIFR results
were impacted by a change in reporting
methodology to better align with the broader
Group, as well as an increase in manual
handling injuries. Bunnings has implemented
a strategy to improve TRIFR.
We recognise the benefits of maintaining
a diverse, inclusive workforce, and the
Leadership Team and Board remain in
gender balance. The Group also remains
at proportional representation with
approximately 3.3 per cent of Wesfarmers’
Australian team members identifying as
Aboriginal or Torres Strait Islander people.
Increasingly, focus is turning to measures
to support the career progression of
Indigenous leaders across the Group
with 103 team members participating in
the Wesfarmers Indigenous Leadership
Program to date.
During the year, we continued to implement
actions to reduce the impact of the Group’s
businesses on the environment, and to
better understand our dependencies on
nature. We reported a 2.4 per cent reduction
in Scope 1 and Scope 2 market-based
emissions for the year. As the largest emitter
within the Group, WesCEF continued to
make pleasing progress, taking actions
aligned with its net zero roadmap.
Overview
Our performance
Portfolio actions
Outlook
The Group’s continuing businesses
generated net profit after tax of
$2.5 billion, an increase of 4.8 per cent,
excluding significant items. Divisional
earnings before tax grew 12.9 per cent
on the prior year.
Wesfarmers’ approach to portfolio
management supports our objective to
deliver satisfactory returns to shareholders
over the long term. This involves a
disciplined approach to capital allocation
and changes to the portfolio over time.
I’m pleased with the significant progress
during the year on key growth projects.
As we look to the future, Wesfarmers
remains focused on long-term value
creation and continues to invest to
strengthen its existing businesses and
develop platforms for growth.
Across the Group, our financial
performance reflected strong operational
execution. While growth in the retail
businesses moderated in the second half,
with pressure on household budgets
impacting trading conditions, consumers
have increasingly sought value which has
benefited our businesses.
Bunnings delivered solid earnings and
another record result, while continuing
to expand its addressable market and
participation across consumer and
commercial segments.
Kmart Group reported strong growth and
record earnings, with its unique product
development capabilities and scale
providing customers with a compelling
offer at very competitive prices. Kmart’s
investment in technology and digitisation
of business processes is starting to deliver
meaningful commercial benefits and
helping to keep prices low.
WesCEF also delivered record earnings,
supplying industrial products to critical
export industries, achieving very high
levels of operational efficiency and strong
safety performance. WesCEF benefited
from strong global ammonia prices during
much of the year.
It was pleasing to see earnings growth in
Officeworks, which is realising the benefits
of strategic investments in recent years,
and continued improvement in
performance at Industrial and Safety.
With its first full year under Wesfarmers
ownership, the Health division delivered
improved earnings and focused on
accelerating its transformation activities,
with a view to delivering improved
performance and value over time.
It was a year of investment for OneDigital,
and pleasing to see the initial rollout of
the OnePass membership program and
further enhancements in our shared data
platform. Together with the retail divisions,
the OneDigital team have established the
foundations for further improvements in
OnePass in coming months.
The financial performance of Catch for the
year was disappointing. Changes made
throughout the year started to deliver
improved performance in the second half,
and key operational and customer metrics
are on a positive trajectory. Further,
investments in Catch are benefiting Group
digital and e-commerce initiatives, in the
areas of fulfilment, subscription and
customer growth.
It has been satisfying to see continued
progress at our Covalent lithium project
which has completed mine construction
and is commissioning the concentrator.
WesCEF expects to sell spodumene
concentrate early in 2024, delivering the
first earnings for our lithium business.
The 2023 financial year was a
foundational year for our Health division.
The division is undergoing a period of
investment to upgrade systems and
processes associated with its
transformation program and establishing
its management team. It completed the
acquisition of InstantScripts in July 2023,
and is progressing a proposal to acquire
SILK Laser Australia.
Wesfarmers sold its remaining
2.8 per cent interest in Coles in April 2023
and finished the year with significant
balance sheet flexibility, providing capacity
to continue to invest in the growth of our
existing businesses and take advantage
of investment opportunities where they
create value for our shareholders.
Leadership team
I’d like to recognise and thank our
outgoing Company Secretary,
Vicki Robinson, who is stepping down
from this role in October, after more than
20 years with Wesfarmers. As Company
Secretary, Vicki has been a valuable
member of the Leadership Team, always
bringing commercial acumen and
Wesfarmers’ values to her work. We
wish Vicki the best for the future.
During the second half of the year, we
were pleased to appoint Michael Britton
as Executive General Manager, Business
Development, joining the Leadership Team.
Michael brings deep experience in mergers
and acquisitions, private equity and
corporate advisory.
I’d also like to thank and congratulate
Aaron Hood who has returned to
WesCEF as Chief Operating Officer,
having led the Business Development
team this year. As a member of the
Leadership Team, Aaron supported our
businesses on a number of strategic
initiatives and new investments.
While overall economic conditions will
continue to present both opportunities
and challenges, we have confidence that
Wesfarmers is well positioned for the
current environment.
Our retail divisions have strong valuebased, omnichannel offers providing
essential and everyday products. They
will continue to benefit from increasing
value-focus among consumers,
expanding addressable markets,
population growth and much-needed
investment in housing.
Our industrial businesses have strategic
domestic manufacturing capabilities
that allow them to support world-class
Australian export industries including
agriculture, iron ore, gold and critical
minerals. The Health division provides
exposure to the growing health and
wellness sector, with opportunities to
deliver more accessible and affordable
healthcare.
Our businesses are delivering on plans
to reduce their emissions profile, which
will strengthen their competitive position.
Production of lithium for battery electric
vehicles in the coming year will further
support our contribution to global
decarbonisation efforts.
Underpinning all of this is a strong balance
sheet which provides flexibility to invest in
our existing businesses and pursue
transactions that create value for
shareholders over the long term.
I express my gratitude to our dedicated
team members across the Group for their
exceptional contributions, as well as the
Board for its invaluable support and
guidance during another challenging
year. I would particularly like to
acknowledge this year’s Leadership
Team, including Emily Amos, Ian Bailey,
Michael Britton, Jenny Bryant, Tim Bult,
Naomi Flutter, Anthony Gianotti,
Ian Hansen, Aaron Hood,
Sarah Hunter, Vicki Robinson,
Mike Schneider, Nicole Sheffield and
Maya vanden Driesen. Your commitment
and support have been instrumental in
our success.
Rob Scott
Managing Director
Wesfarmers 2023 Annual Report
13
Overview
Leadership
Team
1
2
3
4
5
6
1 Rob Scott
3 Maya vanden Driesen
6 Emily Amos
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
WESFARMERS
GROUP GENERAL COUNSEL
WESFARMERS
MANAGING DIRECTOR
WESFARMERS HEALTH
Maya was appointed Group General Counsel in January
2015. Prior to this, Maya held a number of senior roles
in the company including Legal Counsel – Litigation,
Senior Legal Counsel and General Manager Legal –
Litigation. Before joining Wesfarmers, Maya practised
law at Parker & Parker and Downings Legal.
Emily was appointed Managing Director of Health
in April 2022. She leads the turnaround of the
API business and the development of healthrelated opportunities.
Rob was appointed Managing Director and Chief
Executive Officer in November 2017 following his
appointment as Deputy Chief Executive Officer in
February 2017.
Rob joined Wesfarmers in 1993, before moving into
investment banking, where he held various roles in
Australia and Asia. He re-joined Wesfarmers in
Business Development in 2004, was appointed
Managing Director of Wesfarmers Insurance in 2007
and then Finance Director of Coles in 2013. Rob was
appointed Managing Director, Financial Services in
2014 and then Managing Director of the Wesfarmers
Industrials division from August 2015 to August 2017.
Rob is the Chairman of Rowing Australia and a
Director of the Business Council of Australia.
2 Anthony Gianotti
CHIEF FINANCIAL OFFICER
WESFARMERS
Anthony was appointed Chief Financial Officer of
Wesfarmers in November 2017.
Anthony joined Wesfarmers in 2004 in Business
Development and in 2005 was appointed Manager,
Investor Relations and Business Projects. In 2006, he
was appointed Head of Business Development and
Strategy of Wesfarmers Insurance, then its Finance
Director in 2009 and Managing Director in 2013. In
August 2015, Anthony was appointed Finance Director
of the Wesfarmers Industrials division and its Deputy
Managing Director in February 2017. He is also a
director of West Australian Opera.
Maya is a Graduate of the Australian Institute of
Company Directors and sits on the Executive
Committee of the GC 100, representing the general
counsel of Australia’s top 100 ASX-listed companies.
Maya is a member of Chief Executive Women,
the UWA Law School’s Advisory Board, Director
for the Committee for Perth and Director of the
Bell Shakespeare Company.
4 Michael Schneider
MANAGING DIRECTOR
BUNNINGS GROUP
Michael was appointed Bunnings’ Managing Director
in 2016.
Michael joined Bunnings in 2005, and prior to this held
a range of senior operational, commercial and human
resource roles across regional and national markets,
in retail and financial services.
Outside Bunnings, Michael supports a range of
not-for-profit and community organisations. He holds
board roles with the Corporate Mental Health Alliance
of Australia, Melbourne United basketball club and
the Global Home Improvement Network. In addition,
Michael chairs FightMND and the Love Me Love You
Foundation.
5 Ian Bailey
MANAGING DIRECTOR
KMART GROUP
Ian was appointed Managing Director of Kmart in
February 2016 and assumed the responsibility for
leading Kmart Group in November 2018. Previously,
Ian was Kmart’s Chief Operating Officer where he
was instrumental in Kmart’s turnaround.
Ian’s national and international experience covers
a number of industries including retail, professional
services, consulting, technology and healthcare in
positions that include general management, sales,
business development and project management.
Prior to joining Wesfarmers, Emily’s recent roles
include Managing Director of BUPA Health Insurance
and Managing Director of BUPA Health Services in
Australia and New Zealand.
Emily is a former non-executive director of Adore
Beauty and has significant retail experience through
positions in Australia and the UK, in finance and
strategy. Emily is a member of Chief Executive
Women.
7 Sarah Hunter
MANAGING DIRECTOR
OFFICEWORKS
Sarah was appointed Managing Director, Officeworks
in January 2019.
Prior to this, Sarah worked across many areas of the
Coles Group in positions including Financial Controller,
State General Manager Victoria and Demerger Program
Director, overseeing Coles’ implementation of the
demerger from Wesfarmers.
Before joining Coles, Sarah worked in the UK for more
than 10 years, holding several senior commercial
positions in banking and airports including Strategy
and Finance Director for Gatwick Airport from 2004
to 2006.
Sarah is a Council member of the Australian Retailers
Association, a member of Chief Executive Women,
a Fellow of the Association of Chartered Certified
Accountants and a member of the Australian Institute
of Company Directors.
8 Vicki Robinson
EXECUTIVE GENERAL MANAGER,
COMPANY SECRETARIAT
WESFARMERS
Vicki was appointed Executive General Manager,
Company Secretariat in March 2020 and is the
Company Secretary of Wesfarmers.
Prior to this, Vicki was General Manager, Legal
(Corporate), playing a key role in many of
Wesfarmers’ key corporate transactions. Vicki joined
Wesfarmers in July 2003 as a Legal Counsel with the
Corporate Solicitors Office. In 2007, Vicki moved to
the role of General Manager for enGen, and returned
to the Corporate Solicitors Office in 2009.
Vicki is a director of RACWA Holdings Pty Ltd.
14
Wesfarmers 2023 Annual Report
Overview
7
8
9
10
11
12
13
14
15
9 Tim Bult
11 Ian Hansen
13 Jenny Bryant
MANAGING DIRECTOR
WESFARMERS INDUSTRIAL AND SAFETY
MANAGING DIRECTOR
WESFARMERS CHEMICALS,
ENERGY & FERTILISERS
CHIEF HUMAN RESOURCES OFFICER
WESFARMERS
Tim was appointed Managing Director of Wesfarmers
Industrial and Safety in April 2020.
Having joined Wesfarmers in 1999, Tim worked in
commercial and business development roles within
the Wesfarmers Energy division, before his
appointment as General Manager of Wesfarmers
Kleenheat Gas in 2005. In 2006, he was appointed
Managing Director of Wesfarmers Energy. From 2009
to 2015, Tim was Executive General Manager,
Business Development. In 2015, he was appointed
Director, Associate Businesses and International
Development and in 2018 was appointed Project
Director for the demerger of Coles. In 2019, he was
appointed Director, Associate Businesses and
Corporate Projects at Wesfarmers.
10 Nicole Sheffield
MANAGING DIRECTOR
WESFARMERS ONEDIGITAL
Nicole was appointed Managing Director of OneDigital
in November 2021, and leads the strategy and
implementation of the Group-wide data and digital
ecosystem. This includes the OnePass membership
program and OneData, and from 1 July 2022, the
Catch business.
Prior to joining Wesfarmers, Nicole held a number of
leadership roles. Nicole was the Executive General
Manager, Community & Consumer, at Australia Post
where she led the Australia Post retail network of
4,400 post offices, all digital channels and the
customer contact centre. Previous roles include Chief
Digital Officer and Managing Director, Digital Networks
at News Corp Australia, overseeing digital strategy,
audience and subscription growth, and Chief
Executive of NewsLifeMedia, leading the lifestyle
publishing division.
Nicole is the President of the Australian Retailers
Association Council and a Member of Chief
Executive Women.
Ian has led the Chemicals, Energy and Fertilisers
division since July 2016. Prior to this, Ian was the
Chief Operating Officer of that business. From
October 2007 to July 2010 he was the Managing
Director of the Chemicals and Fertilisers division.
During Ian’s more than 40 years with Wesfarmers, he
has held a wide range of executive, operational and
commercial management roles, primarily within the
chemicals, energy and fertiliser businesses.
Ian is the Chairman of three Wesfarmers joint venture
boards: Covalent Lithium, Queensland Nitrates and
Australian Gold Reagents. He is also a board member
of industry body Chemistry Australia, and Chair of the
Australian Chapter of the Australia-Chile Business
Council. He is a former board member of the
International Fertilizer Association, Kwinana Industries
Council and Australian Institute of Management.
12 Naomi Flutter
EXECUTIVE GENERAL MANAGER
CORPORATE AFFAIRS
WESFARMERS
Naomi joined Wesfarmers as Executive General
Manager, Corporate Affairs in August 2018.
Prior to this, Naomi worked for Deutsche Bank for
20 years, in roles including head of the Global
Transaction Banking division for Australia and New
Zealand and head of the Trust and Agency business
across Asia.
Naomi currently serves on the Council of the
Australian National University where she is the
Pro Chancellor and is a member of Chief Executive
Women.
Jenny was appointed Chief Human Resources Officer
of Wesfarmers in October 2016.
Prior to this she worked at Coles Group, Mars Inc
(Europe and USA), Vodafone (global) and EMI Music
(global). Over her career, she has held a variety of roles
including international human resources, data analytics
and technology, operations and sales and marketing.
Jenny is a Director of the Flybuys joint venture with
Coles Group Limited and a member of Chief Executive
Women.
14 Aaron Hood
EXECUTIVE GENERAL MANAGER
BUSINESS DEVELOPMENT
WESFARMERS
Aaron was appointed interim Executive General
Manager, Business Development in July 2022.
Prior to this, Aaron was the Chief Financial Officer
of the Wesfarmers Chemicals Energy & Fertilisers
division from 2019, having joined Wesfarmers in 2017
as General Manager, Business Development. Aaron
started his career with Macquarie Bank in Sydney,
before moving into private equity and leading
investments for a prominent Australian family office.
Aaron was appointed Chief Operating Officer,
Wesfarmers Chemicals, Energy & Fertilisers in July 2023.
15 Michael Britton
EXECUTIVE GENERAL MANAGER
BUSINESS DEVELOPMENT
WESFARMERS
Michael joined Wesfarmers in March 2023 in the role
of Executive General Manager, Business Development.
Before joining Wesfarmers, Michael worked in the
private equity industry with global investment firm The
Carlyle Group. Michael has a background in M&A and
strategic projects, with investment experience across
a range of industries including healthcare, consumer
retail and industrial sectors.
Wesfarmers 2023 Annual Report
15
Operating and financial review
Operating and
financial review
At Wesfarmers, our primary objective is to
deliver satisfactory returns to shareholders
over the long term.
It is my pleasure to provide this operating
and financial review, which details our
approach to delivering on this objective.
This review includes an overview of our
operating model, strategies, risks and
prospects, as well as an update on the
Group’s financial position and performance.
For context, the review shares some
detail on the Wesfarmers Way and how
we measure our performance and
allocate capital to deliver long-term
shareholder returns.
Divisional summaries on pages 22 to 64
provide more detail on performance and
strategies for each of the operating
businesses.
I am pleased that we have also continued
to expand and integrate our sustainability
and climate-related disclosures, which are
summarised in this review. Detailed
information, including performance data and
extended case studies, can be found at
www.wesfarmers.com.au/sustainability
This review should be read in conjunction
with the financial statements, which are
presented on pages 131 to 178 of this
annual report.
16
Wesfarmers 2023 Annual Report
The Wesfarmers Way
The Wesfarmers Way, as shown opposite,
provides a framework for how we manage
the Group to generate superior returns
over the long term and sets out our core
values and value-creating strategies.
Wesfarmers’ model of divisional autonomy
drives accountability and focus within the
divisions, with access to capital, and
specialist support available within the
corporate office. A key focus of the Group
is ensuring that each of our divisions has a
strong and empowered management team
that is accountable for long-term strategy
development and execution, as well as
day-to-day operational performance.
Wesfarmers focuses on seven key
enablers to drive operating performance
to best practice:
− outstanding people
− empowering culture
− commercial excellence
− innovation
− robust financial capacity
− social responsibility, and
− sustainability.
The Group maintains strong commercial
discipline in relation to capital investment
decisions and working capital management.
Measuring performance
The key measure used by the Group to
assess satisfactory returns is total
shareholder return (TSR) over the long
term. We measure our performance by
comparing Wesfarmers’ TSR against that
achieved by the broader Australian market.
Growth in TSR is achieved by improving
returns from invested capital relative to the
cost of that capital and by growing the
capital base at a satisfactory rate of return
on capital (ROC).
Given TSR performance is influenced by
the movement in Wesfarmers’ share price,
which can be affected by factors outside
the control of the company, the Group
focuses on return on equity (ROE) as a key
internal performance indicator.
While ROE is recognised as a fundamental
measure of financial performance at a
Group level, ROC has been adopted as
the principal measure of performance for
the divisions.
Operating and
Financial Review
The Wesfarmers Way
OUR PRIMARY OBJECTIVE
To deliver a satisfactory
return to shareholders
VALUE-CREATING STRATEGIES
Strengthen existing businesses
through operating excellence
and satisfying customer needs
Secure growth
opportunities through
entrepreneurial initiative
Renew the portfolio
through value-adding
transactions
Ensure sustainability
through responsible
long‑term management
CORE VALUES
Integrity
ROC focuses divisional businesses on
increasing earnings and/or increasing capital
productivity by managing existing assets
efficiently, as well as making an adequate
return on any new capital deployed.
For those divisions already delivering
strong ROC, key performance measures
also include an earnings growth target.
Divisional targets are reviewed annually
with reference to the performance of the
broader market.
Delivering shareholder returns
As part of Wesfarmers’ approach to
delivering a satisfactory return to
shareholders we seek to:
− drive earnings and cash flow growth
by enhancing the competitive position
of existing businesses
Openness
Accountability
To support this, the Group endeavours to
maintain balance sheet strength and
flexibility so as to be able to take
advantage of opportunities that arise. This
includes maintaining access to diverse
sources of funding, including bank facilities
and global bond markets, and optimising
funding costs.
The Group maintains strong credit
metrics, in line with strong investment
grade credit ratings, supported by good
cash flow generation and disciplined
capital management. Financial risks are
managed by distributing debt maturities
over time, limiting total repayments due
in any given year.
Capital allocation
− acquire or divest businesses where
doing so delivers an increase in longterm shareholder value, and
Wesfarmers continues to evaluate a broad
range of investment opportunities.
Importantly, in assessing these
opportunities, the Group applies a
long-term horizon to investment decisions
and incorporates a detailed assessment of
sustainability considerations focused on
material sustainability issues.
− ensure efficient capital management
and the efficient distribution of franking
credits to shareholders.
The Group maintains strong commercial
discipline in its approach to evaluating
opportunities, with the most important
− continue to invest in Group businesses
where capital investment opportunities
exceed return requirements
Entrepreneurial spirit
criteria being whether the investment is
going to create value for shareholders
over time.
There are three broad avenues for
incremental capital allocation that are
considered by the Group:
− opportunities to deploy capital in
the existing portfolio to drive growth
and productivity and to build
businesses with unique capabilities
and platforms in expanding markets
− in adjacent opportunities where we
can leverage existing assets and
capabilities to develop new sources
of long-term growth, and
− through value-accretive transactions,
where we remain disciplined and
opportunistic.
Overall the portfolio and balance sheet are
well positioned, with a range of growth
initiatives in train and the flexibility and
capacity to continue to consider new
opportunities.
Anthony Gianotti
Chief Financial Officer
Wesfarmers 2023 Annual Report
17
Operating and financial review
Year in review
Overview
The Group reported a statutory net profit
after tax (NPAT) of $2,465 million for the
full year ended 30 June 2023, an increase
of 4.8 per cent on the prior year. Overall,
Wesfarmers’ NPAT growth reflected the
strong combined divisional earnings
growth result, partially offset by a
significant change in non-cash property
revaluations recorded at the Group level.
The results were underpinned by
strong divisional earnings, increasing
12.9 per cent to $3,850 million for
the year, as the Group’s operating
businesses continued to respond well
to trading and market conditions.
Wesfarmers maintained its focus on
long-term shareholder returns and
continued to advance key growth
projects during the year, while also taking
proactive steps to drive productivity and
efficiency across the businesses.
The Group’s largest divisions performed
particularly well during the year, with
solid earnings reported in Bunnings, and
strong earnings growth in Kmart Group
and WesCEF.
It was also pleasing to see significant
earnings growth in Officeworks, which is
realising the benefits from productivity
investments over recent years. Industrial
and Safety continued to improve and
the Health division accelerated its
transformation activities. While the Catch
result was disappointing, investments to
date are benefiting Group digital and
e-commerce initiatives, and actions
taken during the year supported
progress in the second half.
As operating conditions and customer
behaviours continued to normalise during
the year, the Group’s retail businesses
benefited from their well-established
value credentials and strong
omnichannel offers.
Earnings growth across the retail
businesses reflected good operational
execution during the year, in addition to
the impact of cycling COVID-related
lockdowns in the first half of the prior
year. Through the year, retail customers
have increasingly sought out value and
traded down to lower-priced items within
product ranges.
WesCEF delivered another strong
operating performance and a record
earnings result, supported by elevated
global ammonia prices. Construction
was completed at the Mt Holland mine
and concentrator, with commissioning of
the concentrator underway ahead of first
earnings from the project in the first half
of the 2024 calendar year.
The Group continued to advance its data
and digital capabilities during the year,
supported by ongoing investments
across the divisions and in OneDigital.
The application of AI and predictive
analytics continues to develop across
the Group’s retail operations and is
supporting the delivery of productivity
benefits. The OnePass membership
program was expanded through new
partnerships with Bunnings Warehouse,
Disney+, and Flybuys, and additional
member benefits both online and
in stores.
Further details on divisional financial
performance is outlined in pages 22
to 64 of this annual report.
Net profit after tax1
Earnings1, 2
Return on equity (R12)1
(excluding significant items)
(excluding discontinued operations and significant items)
(excluding significant items)
$3,644m
31.4%
$2,465m
3,000
Includes Coles to November 2018
2023
2,465
2022
2,500
2,352
2021
2,000
2,421
Post-AASB 16
1,500
2020
1,000
2,075
Pre-AASB 16
500
0
19
20
21
22
2020
2,091
2019
2,339
$3,627m
Includes Coles to November 2018
2023
3,627
2022
1,110
2021
2,741
Post-AASB 16
2020
5,188
Pre-AASB 16
18
20
21
22
2020
4,239
2019
2,963
23
Wesfarmers 2023 Annual Report
35
2023
31.4
2022
3,416
30
2022
29.4
2021
3,550
25
2021
26.1
20
Post-AASB 16
Post-AASB 16
2020
2,942
Pre-AASB 16
19
Free cash flow
19
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
23
3,644
2023
20
21
22
2020
2,964
2019
2,974
23
Includes Coles to November 2018
2020
15
22.1
Pre-AASB 16
10
5
0
19
20
21
22
2020
21.1
2019
19.2
23
1
2021 excludes post-tax $41 million of restructuring costs in Kmart Group. 2020 excludes post-tax
significant items including: $520 million of non-cash impairments, write-offs and provisions in Kmart
Group, $298 million non-cash impairment of Industrial and Safety, $203 million gain on the sale of
the 10.1 per cent interest in Coles and $154 million revaluation of the retained interest, and a benefit
of $83 million from the finalisation of tax positions on prior year disposals. 2019 excludes post-tax
significant items including: $2,264 million gain on demerger of Coles, $645 million gain on sale of
Bengalla, $244 million gain on sale of Kmart Tyre and Auto Service (KTAS), $120 million gain on sale
of Quadrant Energy and $102 million provision for Coles supply chain automation.
2
EBIT after interest on lease liabilities.
Operating cash flows
Reported operating cash flows increased
81.6 per cent to $4,179 million, supported
by higher divisional cash flows and lower
tax paid due to the timing of tax payments.
Capital expenditure
Gross capital expenditure of $1,288 million
was 12.6 per cent higher than the prior
year, largely due to $394 million of capital
expenditure and $42 million of capitalised
interest relating to development of the
Covalent lithium project. Proceeds from
the sale of plant, property and equipment
of $105 million were $155 million below
the prior year, driven by lower proceeds
from property sales in Bunnings. The
resulting net capital expenditure of
$1,183 million was $299 million, or
33.8 per cent, higher than the prior year.
Free cash flows
Free cash flows of $3,627 million reflected
strong divisional cash flow results together
with the proceeds from the sale of the
Group’s remaining interest in Coles. The
$2,517 million increase in free cash flows
for the year also includes the impact
of cash consideration for the acquisitions
of API and Beaumont Tiles in the
prior year.
Balance sheet
The Group recorded a net financial
debt position of $3,984 million as at
30 June 2023. The reduction compared
to the net financial debt position of
$4,296 million as at 30 June 2022 reflects
strong operating cash flows and proceeds
from the sale of the Group’s remaining
interest in Coles, which offset continued
capital investment and the distribution of
$2.1 billion in fully-franked dividends
paid to shareholders during the year.
Divisional earnings summary
Year ended 30 June
2023
$m
2022
$m
Bunnings Group
2,230
2,204
Kmart Group
769
505
WesCEF
669
540
Officeworks
200
181
Industrial and Safety
100
92
Wesfarmers Health
45
(25)
Catch
(163)
(88)
Total divisional
3,850
3,409
Other
(206)
7
Total earnings1
3,644
3,416
2023
$m
2022
$m
Inventories
Receivables and prepayments
Trade and other payables
Other
Net working capital
6,039
2,300
(5,268)
252
3,323
6,084
2,364
(5,362)
238
3,324
Property, plant and equipment
Goodwill and intangibles
Other assets
Provisions and other liabilities
5,365
4,692
1,099
(1,818)
4,750
4,684
1,877
(1,824)
Total capital employed
12,661
12,811
Net financial debt3
Net tax balances
Net right-of-use asset/(lease liability)
(3,984)
667
(1,063)
(4,296)
575
(1,109)
Total net assets
8,281
7,981
1
EBIT after interest on lease liabilities.
Group capital employed
Year ended 30 June2
2
Balances reflect the management balance sheet, which is based on different classifications and groupings
than the balance sheet in the financial statements. 2022 has been restated to reflect the adjustments to the
provisional acquisition accounting for API.
3
Interest-bearing loans and borrowings less cash at bank and on deposit and held in joint operation, net of
cross-currency interest rate swaps and interest rate swap contracts. Excludes lease liabilities.
Cash capital expenditure
Year ended 30 June
2023
$m
2022
$m
Bunnings Group
405
349
Kmart Group
127
105
WesCEF
518
455
Officeworks
71
68
Industrial and Safety
73
64
Health
41
3
Catch
10
45
43
55
1,288
1,144
Sale of property, plant and equipment
(105)
(260)
Net capital expenditure
1,183
884
Other
Gross capital expenditure
Wesfarmers 2023 Annual Report
19
Operating and
Financial Review
Divisional operating cash flows before
interest, tax, and the repayment of lease
liabilities increased 45.6 per cent compared
to the prior year, with divisional cash
generation of 101 per cent. Divisional
cash flow growth was supported by stronger
divisional earnings, the addition of the Health
division, and the continued normalisation
in working capital positions following the
temporarily high balances recorded at the
end of the 2022 financial year. Overall
inventory health is strong, with good stock
availability across the retail divisions, and
inventory cover ratios have returned to
broadly in line with pre-COVID levels.
Operating and financial review
Year in review
Debt management
and financing
Fixed financial obligations
Debt maturity profile ($m)1
DRAWN BANK FACILITIES
Other finance costs increased
40.6 per cent to $135 million, reflecting
higher average borrowings during the year.
On a combined basis, other finance costs
including the component of interest that
was capitalised increased 36.2 per cent
to $177 million.
The Group retains significant headroom
against key credit metrics and maintained
its strong credit ratings with a rating
from Moody’s Investors Service of
A3 (stable) and a rating from S&P Global
Ratings of A- (stable).
Dividends
A key component of total shareholder
return is dividends paid to shareholders.
The Group’s dividend policy considers
available franking credits, current
earnings and cash flows, future
cash flow requirements and targeted
credit metrics.
The Board has determined to pay a
fully-franked ordinary final dividend of
103 cents per share, taking the full-year
ordinary dividend to 191 cents per
share. Due to the accumulation of
New Zealand franking credits, the final
dividend will also carry a New Zealand
franking credit, in addition to the
Australian franking credit, of 10 cents
(NZD) per share. The final dividend will
be paid on 5 October 2023.
Given the preference of many
shareholders to receive dividends in
the form of equity, the directors have
decided to continue the operation of the
Dividend Investment Plan (the ‘Plan’).
The allocation price for shares issued
under the Plan will be calculated as the
average of the daily volume-weighted
average price of Wesfarmers shares on
each of the 15 consecutive trading days
from and including the third trading day
after the record date.
The last date for receipt of applications
to participate in, or to cease or vary
participation in, the Plan, is
1 September 2023. No discount will
apply to the allocation price and the
Plan will not be underwritten. Shares
to be allocated under the Plan will
be transferred to participants on
5 October 2023. Given the Group’s
strong credit metrics, it is intended that
any shares to be issued under the Plan
will be acquired on-market and
transferred to participants.
20
Wesfarmers 2023 Annual Report
UNDRAWN BANK FACILITIES
CAPITAL MARKET DEBT
2,400
2,100
1,800
1,500
1,200
Lease liabilities
$6.7b
Bank facilities & bonds
$4.4b
1
1
Represents total discounted lease liabilities
as at 30 June 2023.
900
600
300
0
1
24 25 26 27 28 29 30 31 32 33
As at 30 June 2023. Capital market debt is net of
cross-currency interest rate swaps.
Other finance costs ($m)
CAPITALISED INTEREST
OTHER FINANCE COSTS
200
150
100
50
0
19
20
21
22
23
TSR1: Wesfarmers and ASX 100
Dividends per share
ORDINARY DIVIDENDS
(last five years)
SPECIAL DIVIDENDS
191cents
WESFARMERS LIMITED TSR INDEX1
ASX 100 ACCUMULATION INDEX
250
200
300
150
250
2023
191
200
2022
180
150
2021
178
23
100
2020
152
Assumes 100 per cent dividend reinvestment
on the ex-dividend date. Source: Bloomberg,
excludes any additional value of franking credits.
50
2019
178
100
50
0
1
18
19
20
21
22
Includes Coles
Ordinary dividends
0
19
20
21
22
23
Risk
Wesfarmers recognises the importance
of, and is committed to, the identification,
monitoring and optimal management of
risks associated with its activities across
the Group.
In line with previous years, information on
climate-related risks is provided on pages
84 to 86 of this annual report.
Strategic risks
− Competition
− Strategy execution
− Business model disruption
− Digital disruption
− Changing customer expectations
− Portfolio management
Regulatory risks
− Risks to the health, safety or
wellbeing of team members and
customers
− Compliance with applicable laws,
regulations and standards
− Regulatory or legislative change
− Technology, cyber-security and datarelated risks, inclusive of privacy and
data optimisation
Financial risks
− Currency and commodity price
movements
− Business disruption, loss of major
infrastructure and physical security
− Liquidity and access to funding
− Risks inherent in distribution and sale
of products, including product safety
− Conduct risk
− Human rights risks, including modern
slavery in own operations and supply
chains
− Climate and nature-related risks,
including emissions management
Further information on risk management,
including policies, responsibility and
certification, can be found on page 94
of this annual report and in the corporate
governance section of the company’s
website at www.wesfarmers.com.au/cg
− Risks inherent in asset management,
including process safety risk
− Talent attraction, retention and
engagement
− Supply chain and inventory
management
− Clinical governance risks in
Wesfarmers Health
− Geopolitical risks including potential
impacts on global supply chains or
input prices
− Climate-related risks
Prospects
Wesfarmers remains focused on
long-term value creation and continues
to invest to strengthen its existing
businesses and develop platforms
for growth.
Following investment over recent years,
the Group’s lithium business is expected
to commence production and sale of
spodumene concentrate during the 2024
financial year. The ongoing development
of Wesfarmers’ lithium operations reflects
the Group’s disciplined focus on
long-term shareholder value creation
and opportunities to contribute to,
and benefit from, global efforts to
reduce emissions.
Elevated inflation and higher interest
rates are expected to continue to impact
demand in parts of the Australian
economy, with many customers
becoming more value conscious and
trading down to lower-priced retailers
and products. Low unemployment and
the recent acceleration in Australian
population growth both support demand,
and contribute to the ongoing need for
construction of additional housing stock.
In the current environment, the strong
value credentials and core offer of
everyday products across the Group’s
retail businesses position them well to
meet changing customer demand,
acquire new customers and profitably
grow market share.
Cost pressures in Australia and
New Zealand are expected to remain
elevated, driven by inflation, labour
market constraints and wage cost
increases, and domestic supply chain
costs. Wesfarmers’ larger businesses are
benefiting from their capacity to leverage
their scale and sourcing capabilities.
Together with benefits from proactive
productivity and efficiency investment
over recent years, this provides
confidence in the Group’s capacity to
adjust costs in line with trading
conditions.
The performance of the Group’s
industrial businesses remains subject to
international commodity prices, foreign
exchange rates, competitive factors and
seasonal outcomes. Earnings from
WesCEF’s existing operating businesses
are expected to decline significantly in
the 2024 financial year, primarily as a
result of lower ammonia prices and
higher input gas costs. First earnings
from WesCEF’s lithium business are
expected in the second half of the 2024
financial year as production of
spodumene concentrate ramps up.
Wesfarmers will continue to invest in
its existing operations and in the
development of platforms for long-term
growth and shareholder value creation.
Wesfarmers will continue to manage its
divisions and the portfolio with carbon
awareness, remaining focused on
delivering progress against its net zero
and renewable electricity targets and
making disciplined investments to
strengthen the climate resilience of its
businesses. The Group sees opportunities
to support the supply of critical minerals
and essential industries, aligned with
customer and community decarbonisation
and energy transition goals.
Wesfarmers 2023 Annual Report
21
Operating and
Financial Review
The following information sets out the
material Group-wide risks, not in any
particular order. These do not include
generic risks such as changes to
macroeconomic conditions affecting
businesses and households in Australia,
which would affect all companies with
a large domestic presence, although
Wesfarmers is well positioned in this
regard to meet changing customer
demand.
Operational risks
Operating and financial review | Bunnings Group
Bunnings Group
Bunnings is one of Australia’s most-trusted
retail brands, supported by its commitment
to lowest prices, widest range and best
experience along with a unique capacity to
expand its addressable market.
22
Wesfarmers 2023 Annual Report
Our business
Bunnings operates a network of 513
locations, including large warehouse
stores, smaller format stores, trade
centres, specialist stores, as well as online.
Bunnings employs more than 52,000
team members across Australia and
New Zealand.
Bunnings’ three pillars remain core to
how it delivers for customers; lowest
prices, widest range, and best experience.
These pillars come to life through its
physical and digital presence and the
ways that Bunnings connects and serves
its customers onsite, in the home, on
the phone, instore and online.
Bunnings has evolved from a warehouse
model offering around 34,000 hardware
and home improvement products to an
omnichannel business with over 110,000
home, commercial and lifestyle products
across its instore, online and marketplace
offers.
Bunnings is expanding its brand reach
through the opening and expansion of
stores, growing specialist retail brands,
digital innovation and by deepening its
commercial relationships. The focus is
on creating value for customers and
delivering the best experience while
working to ensure that products are
sourced ethically and responsibly.
Revenue
Earnings before tax
Operating and
Financial Review
Bunnings is the leading retailer of home
improvement and lifestyle products in
Australia and New Zealand, and a major
supplier to project builders, commercial
tradespeople and the housing industry.
Highlights and outlook
$18,539m $2,230m
2023
18,539
2023
2,230
2022
17,754
2022
2,204
2021
16,871
2021
2,185
2020
14,999
2020
1,826
2019
13,166
2019
1,626
Revenue for Bunnings increased
4.4 per cent to $18,539 million for the
year, with earnings increasing 1.2 per cent
to $2,230 million. Excluding net property
contribution, earnings increased
1.9 per cent. The solid sales and earnings
results reflect the resilience of demand
across its offer and continued strong
execution of Bunnings’ strategic agenda.
Bunnings remains committed to reducing
its environmental footprint and
sustainability is an important part of
ensuring its business continues to make a
positive impact into the future. Bunnings is
actively progressing towards 100 per cent
renewable electricity by 2025 and has made
significant progress towards its Scope 1
and Scope 2 emissions net zero target.
Bunnings’ 52,000 team members are at
the heart of the business and their safety
and wellbeing remain the number one
priority. TRIFR increased to 16.5 for the
period, largely driven by a change in
methodology from 1 July 2022 to align
the classification of recordable injuries
with the Group’s other businesses as well
as an increase in the number of manual
handling injuries for the period. Safety
remains a key focus and a comprehensive
plan to improve safety performance
throughout the business has been
developed and is being rolled out.
In this environment, Bunnings will continue
to deliver strong customer value supported
by a sharpened focus on operational
execution, strong cost disciplines and
ongoing progress on key productivity
initiatives.
Bunnings remains focused on delivering
its strategic agenda and will continue to
strengthen its offer across consumer and
commercial customer segments and
across channels instore, online, onsite
and at home.
Bunnings will continue to invest in the
expansion and renewal of its store
network, and maintain its focus on
optimising the use of retail space. Work
on key strategic initiatives will continue,
with actions to:
− further develop the commercial offer
to better service builders, trades and
organisations
− strengthen data and digital capabilities
to allow customers to shop
seamlessly across channels, and
− evolve the supply chain.
Bunnings continues to be well positioned,
benefiting from the breadth and diversity
of its business, its focus on necessity
products, and the strength of its offer
across consumer DIY and commercial
customers.
Inflationary pressure on household
budgets and costs of doing business is
expected to remain elevated during the
2024 financial year.
Michael Schneider
Managing Director
Bunnings Group
Wesfarmers 2023 Annual Report
23
Operating and financial review | Bunnings Group
Our performance
Year in review
Key financial indicators
For the year ended 30 June
2023
2022
Revenue ($m)
18,539
17,754
Earnings before tax ($m)
2,230
2,204
Capital employed ($m) R12
3,410
2,854
Return on capital employed (%) R12
65.4
77.2
Cash capital expenditure ($m)
405
349
Sustainability results
2023
2022
Total recordable injury frequency rate (TRIFR)1 R12
16.5
11.3
Aboriginal and Torres Strait Islander team members
1,246
1,288
Scope 1 and Scope 2 market-based emissions (ktCO2e)
59.9
104.9
Operational waste diverted from landfill (%)
57.1
54.9
Community contributions ($m)
47.4
29.8
65
51
Sites in the ethical sourcing program that were monitored (%)2,3
1
2
3
TRIFR measures the number of lost time and medical treatment injuries per million hours worked.
The frequency of monitoring varies depending on prior audit findings and the level of assessed risk.
Ethical sourcing data for the twelve months to 15 June.
Revenue for Bunnings increased
4.4 per cent to $18,539 million for the
year, with earnings increasing 1.2 per cent
to $2,230 million. Excluding net property
contribution, earnings increased 1.9 per cent.
Bunnings’ solid financial results continue
a four-year period of significant growth,
during which sales have increased
more than $5.3 billion or 40.7 per cent
and earnings excluding net property
contribution have increased more
than $650 million or 42.2 per cent.
Total store sales increased 3.7 per cent
and store-on-store sales increased
1.8 per cent. Sales growth results for the
year demonstrate the resilience of demand
across the Bunnings offer and continued
strong execution of its strategic agenda.
Growth was recorded in both consumer
and commercial customer segments and
across all trading regions, despite the
impact of prolonged wet weather on
spring trading on the east coast during
the first half of the year.
In the second half, Bunnings total store
sales increased 2.1 per cent and
store-on-store sales increased
0.8 per cent. Second half sales growth
reflected strong demand and activity from
commercial customers partially offset by
lower consumer sales. Robust consumer
demand continued for necessity products
that support recurring home repairs and
maintenance and smaller-scale DIY home
24
Wesfarmers 2023 Annual Report
People
improvement projects. Compared to
the prior corresponding half, consumers
demonstrated more caution in making
big-ticket purchases and commencing
larger DIY projects.
Safety, health and wellbeing
Bunnings maintained its focus on
delivering value to customers through
lowest prices, widest range and best
experience. Product ranges were reviewed
and refreshed during the year, and new
expanded categories were introduced,
including the successful launch of pet food
and durables, as well as the introduction
of additional own-brand products that
provide customers attractive value options.
Bunnings continued to invest to improve
the customer experience instore and
through digital channels. New instore
concepts and layout changes made
Bunnings stores easier to shop and
enabled team members to spend more
time helping customers, while
enhancements to the website, PowerPass
app and Bunnings app improved the way
customers gather information, find
products and transact in digital channels.
Key supply chain, data and technology
projects continued to progress during
the year, supporting improvements in
efficiency, space utilisation and customer
experience. Within the supply chain, this
included enhancements to fulfilment
capabilities such as ongoing pilots using
stores as hubs to deliver an efficient and
low-cost last mile experience for customers.
Advances were made in the commercial
‘Whole of Build’ strategy, with
improvements in the sales and service
model, enabling customers to shop more
efficiently. Bunnings also expanded its
Frame and Truss network creating more
opportunities to connect with builders early
in a project and become a partner of
choice for the whole build. Tool Kit Depot
expanded into Queensland and Victoria
catering to local demand for professional
tools while Beaumont Tiles expanded into
timber flooring.
Earnings growth for the period highlighted
the resilience of Bunnings’ business
model and its ability to adjust operating
costs and drive productivity initiatives to
manage the impact of higher cost inflation
during the year.
As always, Bunnings retained its focus
on ensuring it operates at the lowest cost,
driving operational efficiencies and
productivity across the business.
Technology and process improvements
led to 700,000 hours of team member
time reinvested back into service.
During the year, Bunnings completed 18
upgrades and three store expansions to
improve the local offer and opened three
net new Bunnings warehouses. At the
end of the financial year there were
285 warehouses, 67 smaller format
stores and 31 trade centres in the
Bunnings network, 14 Tool Kit Depots
and 116 Beaumont Tiles stores.
During the year, Bunnings:
Bunnings expands its
range of pet products
In March 2023, Bunnings launched a
major expansion to its pet product range,
introducing hundreds of new items across
categories such as pet food, toys and
accessories in Australia.
The launch marked the largest category
expansion for Bunnings in almost 20 years
and responded to strong customer
research indicating the growing
importance pets play in families.
Pets is the latest example of Bunnings
applying its proven strategy of listening to
customers and identifying opportunities to
expand its addressable market through
range innovation and expansion.
The product line-up includes household
favourites such as Pedigree and
Supercoat along with Bunnings-exclusive
own brands, including Trusty and
Happy Tails.
Store presentation has always been critical
to Bunnings, and dedicated space was
created across the Australian store
network to merchandise products and
create a one-stop pet owners’ destination.
Team members underwent special training
so they can provide the expert advice
Bunnings customers have come to love
and expect.
At a time when Australian shoppers are
looking to make their household budgets
go further, especially for higher frequency
items like pet food, the expanded range
represents more value and choice for
pet owners.
The new range has resonated strongly
with Bunnings’ loyal customers and
attracted new customers that have not
shopped with the brand previously.
− continued to identify safety risks
in the workplace, implementing
the Life-Threatening Risk Program
which included introducing lifesaving
controls for forklift and pedestrian
interactions across all sites
− launched an early intervention injury
management program for team
members, ensuring prompt advice
and recovery treatment options
for team members are available if
required, and
− commenced a program to improve
capability of leaders and support
team to proactively prevent and
manage mental ill-health and widened
access to counselling and wellbeing
support services.
Bunnings also strengthened incident
investigation processes, with a focus on
learning and improving from near-miss
incidents. Over 50 investigations were
completed, many with business-wide
actions implemented. This change is
intended to reduce the risk of team
member and customer injury as a result
of handling large, bulky items.
Bunnings has seen an increase in the
frequency of violence and aggression
towards retail team members by
customers. In response, Bunnings trialled
increased signage in higher risk areas and
launched a high-risk role working group,
with the aim of accelerating efforts to
protect team members. Bunnings
continues to focus on the mental and
physical health and wellbeing of its team.
Efforts to enhance team member
wellbeing in 2023 included streamlining
access to support, building internal
capability through the redesign and
delivery of training to leaders, and
addressing identified psychosocial
hazards.
Wesfarmers 2023 Annual Report
25
Operating and
Financial Review
Bunnings’ TRIFR was 16.5 for the
period, compared to 11.3 in the prior
corresponding period. Bunnings’
deterioration in safety performance is
predominantly due to a change in
methodology from 1 July 2022 to align
the classification of recordable injuries with
the Group’s other businesses, as well as
an increase in manual handling injuries.
Bunnings developed a comprehensive
plan to improve safety performance
throughout the business, with the aim
of managing injury risk and improving
safety performance.
Operating and financial review | Bunnings Group
Bunnings supports mental
health in the trade industry
Bunnings believes that suicide prevention
is everyone’s business.
Recognising this responsibility, Bunnings
Trade has partnered with an industrybased charity, MATES in Construction
(MATES), which is working to reduce the
suicide rate among Australian construction
workers.
In August 2022, Bunnings Trade and
MATES released a limited edition,
co-branded hoodie, with all profits from
sales going directly to MATES. The
campaign helped raise and contribute
$500,000 to support MATES’ vital work.
To celebrate the launch, Bunnings hosted
a National Trade BBQ across all Australian
stores, providing an opportunity for tradies
to engage with MATES and each other, to
raise awareness of mental health and
suicide prevention.
A similar initiative took place in
New Zealand, with Bunnings Trade
partnering with Movember to raise more
than NZ$63,000 for their important work
supporting men’s health and wellbeing.
Diversity and inclusion
Bunnings actively works to ensure
that its team is representative of the
communities in which it operates,
providing employment opportunities for
all, regardless of age, gender, cultural
heritage, sexual orientation or ability.
Bunnings is proud that half of its team
members are women, and team members
speak more than 70 languages. Team
members represent a wide range of ages
with 28 per cent of team members aged
over 50, and 46 per cent aged under
30 years.
Supporting Aboriginal and Torres Strait
Islander people to secure fulfilling jobs with
career and leadership opportunities is a
priority for Bunnings. In Australia, 1,246 or
2.7 per cent of team members identify as
26
Wesfarmers 2023 Annual Report
Aboriginal and Torres Strait Islander. To
better enable recruitment of Aboriginal
and Torres Strait Islander team members,
Bunnings operates programs to support
Indigenous candidates during recruitment
and onboarding. This includes the
Transition to Work program which is
focused on supporting people
experiencing hardship as they progress
into permanent and rewarding work
at Bunnings.
In September 2022, Bunnings also
launched a uniform recycling program for
all team members.
Climate and energy
Bunnings continued to offer instore,
drop‑off services to recycle household
and power tool batteries across
Australia and New Zealand, and products
with a power cord in selected South
Australian stores.
Reducing energy consumption and
transitioning to renewable electricity
across its network are the foundation of
Bunnings’ efforts to reduce greenhouse
gas emissions. During the year, Bunnings
made significant progress towards its
target to achieve 100 per cent renewable
electricity by 2025, and net zero Scope 1
and Scope 2 market-based emissions
by 2030.
As a member of the Australian Packaging
Covenant Organisation (APCO), Bunnings
is committed to working towards
100 per cent sustainable packaging.
During the year, Bunnings launched its
Sustainable Packaging Guidelines to
internal teams and selected suppliers
to accelerate this transition.
As of June 30, renewable electricity
accounted for 64.4 per cent of all
electricity use by Bunnings and Scope 1
and Scope 2 market-based emissions
reduced by 42.9 per cent.
Bunnings’ progress is largely attributable
to new long-term renewable power
purchase agreements (PPAs). In Victoria,
Bunnings executed a PPA contract that
took effect on 1 July 2022, covering
97.9 per cent of Bunnings’ electricity load
in Victoria. In South Australia, Bunnings’
large sites currently use 57.5 per cent
renewable electricity and expect to
transition to 100 per cent renewable
electricity from 1 July 2024. Bunnings
also executed a new renewable
electricity contract for small sites across
New South Wales, Queensland,
South Australia, the Australian
Capital Territory and Victoria. Bunnings
sites in New Zealand continue to be
powered by 100 per cent renewable
electricity.
Bunnings launches a plant
pot recycling program
As a member of the APCO, Bunnings is
committed to supporting improvements
in recycling plastic packaging. In 2021,
a plastic plant pot recycling program was
trialled in selected stores in New Zealand.
After a successful trial, Bunnings
extended the program which now covers
more than 80 stores across Australia and
New Zealand.
During the year, Bunnings rolled out
31 new solar photovoltaic (PV) systems
and as at 30 June 2023, 127 solar PV
systems were installed on Bunnings’
Australian store network. Each solar PV
system provides up to 30 per cent of a
store’s electricity needs.
Through the program, Bunnings’
customers can return used plant
packaging, such as plant pots and
stakes, made from polypropylene plastic
(PP5), for reuse and recycling. Given
many recycling facilities cannot readily
accept PP5 packaging, this program
diverts plastic away from landfill.
Circular economy
The plastic packaging collected is recycled
into new items, such as recycled plastic
pots, creating a circular solution.
Reducing operational waste and
increasing resource recovery are key areas
of focus, as Bunnings seeks to reduce its
impact on the natural environment.
This year, Bunnings diverted 57.1 per cent
of its operational waste from landfill, an
improvement of 2.2 percentage points
compared to the previous year.
Additionally, to promote reuse, used
plastic plant pots are available to
customers free-of-charge.
Community contributions
Operating and
Financial Review
Bunnings supports communities to come
together, through activities such as
sausage sizzles, hands-on programs and
instore fundraising. Bunnings’ community
contributions include cash donations, gift
cards, labour and product contributions,
and indirect contributions, enabled by
Bunnings and donated by team members
and customers.
During the year, Bunnings’ community
contributions totalled $47.4 million,
comprising $6.4 million in direct
contributions and $41.0 million in indirect
contributions.
Bunnings supported more than 70,000
community activities, with team members
assisting local groups (including schools,
nursing homes and hospitals) to build
community gardens, to complete painting
projects and to conduct educational
workshops.
In October 2022, devastating floods in
Victoria, New South Wales and Tasmania
impacted many Bunnings stores, team
members and local communities.
Bunnings assisted relief efforts by
supplying $25,000 in products and
materials, and the Bunnings team
supported The Salvation Army with a
national Reds Run sausage sizzle, raising
over $400,000 for recovery work.
In January 2023, extreme weather and
floods impacted communities across the
Kimberley region, in Western Australia.
To support these communities Bunnings
donated products and hosted a statewide Reds Run sausage sizzle, with
volunteer support from The Salvation Army
and Wesfarmers, raising more than
$50,000 for The Salvation Army.
In January and February 2023, Cyclone
Gabrielle caused severe flooding and
destruction in New Zealand. Team
members provided on-the-ground support
in the community, helping with the
clean-up, alongside volunteers and
government agencies. Bunnings
supported community groups, emergency
services and other government agencies
with over NZ$100,000 in products and
materials, including gumboots, clean-up
equipment, personal protective
equipment, storage supplies, water,
batteries, generators and gas cylinders.
The Bunnings team also held a Reds Run
sausage sizzle, with NZ$35,000 raised for
New Zealand Red Cross.
Late in the financial year and for the fifth
consecutive year, Bunnings supported
FightMND to raise $1.5 million from team
members and customers. Funds raised
are directed by FightMND to enable
research into motor neurone disease.
Circular Head
Aboriginal Corporation
partnership
Bunnings recognises the importance of
supporting Indigenous communities and
employment by ranging products that
directly engage and benefit Indigenous
organisations. This includes partnering
with Indigenous organisations and
Traditional Owner groups to support
strategies that enable them to realise
an economic value from Native Title
interests in land.
During 2022, a new collaboration was
established between Circular Head
Aboriginal Corporation (CHAC),
Bunnings and Seasol.
Working together, the collaborators are
developing a Seasol indoor plant liquid
fertiliser made with sea kelp harvested
by CHAC.
CHAC is an Indigenous, not-for-profit
organisation established in 1994, to
represent the Aboriginal people of
Circular Head and the nine Aboriginal
tribes of northwest Tasmania.
Human rights and ethical
sourcing
Bunnings’ ethical sourcing program is
based on the United Nations Guiding
Principles on Business and Human Rights
and aligns with the minimum standards
set out in Wesfarmers Ethical Sourcing
and Modern Slavery Policy. Key elements
of Bunnings’ ethical sourcing program
include clear guidance in supplier trading
terms, and active monitoring of working
conditions in high-risk supply chains
including through supplier assessments,
third-party audits and worker voice
initiatives.
Selina Maguire-Colgrave, Chairperson of
CHAC, explains, ‘culture is at the heart
of all we do at CHAC. It informs our
operations and guides our direction’.
CHAC’s vision is to embrace culture,
leverage ancient practice and empower
future Indigenous leaders. It promotes
sustainable management of natural
resources to provide training and
employment opportunities for future
generations.
Together, Bunnings and Seasol are
working with CHAC to bring this product
to life.
The collaboration will enable CHAC to
employ local Indigenous people to
harvest kelp, which will be purchased
by Seasol for use as a key ingredient in
liquid fertiliser.
Bunnings and Seasol have provided
commercial support to CHAC, and the
product will be exclusively sold in
Bunnings stores once the product is
ready for sale to customers. Bunnings
and Wesfarmers have also provided
financial support to CHAC through the
Wesfarmers Building Outstanding
Aboriginal Businesses (BOAB) Fund.
During the year, Bunnings conducted
more than 950 pre-qualification risk
assessments of suppliers and
manufacturers and supported 530
independent third-party audits. In
response to these activities, Bunnings
supported 235 supplier manufacturing
sites to remediate more than 1,400
identified minor, major and reportable
non-conformances, with the aim of
improving working conditions for more
than 70,000 workers in 18 countries.
See page 73 describing the Your Voice
Grievance Mechanism.
Visit our website to read more:
wesfarmers.com.au/sustainability
Wesfarmers 2023 Annual Report
27
Operating and financial review | Bunnings Group
Strategy
Bunnings’ strategy starts with demonstrating genuine care for its team, customers, suppliers, and the environment every day and
building strong relationships with the communities it serves.
To continue to grow, Bunnings is focused on providing customers the best offer, delivering exceptional value, innovating on range and
pushing into new product categories to expand the addressable market. It is deepening its relationships with commercial customers by
having a service model and product offer to better meet their needs.
Simplicity is core to the Bunnings strategy and supports the business to operate as efficiently as it can to reinvest in lower prices.
This is underpinned by a program of continuous improvement and evolution across supply chain, space management and the use of
data and digital assets.
Strategies
Achievements
Focus for the coming years
Deliver
lowest prices
– Strong investment in maintaining price
leadership
– Created more value for customers on products
that matter most to them
– Disciplined focus on lowest cost
– Introduced high quality own-brand products to
provide greater value in selected categories
– Reinvest in price by simplifying processes and
systems to lower costs
– Deliver low prices by lowering the cost of goods
– Introduce new own-brand options
Deliver
widest range
– Focused on growth across all of our product
categories through a number of range reviews
– Identified opportunities to achieve step-out
growth by expanding our addressable market,
including launching an expanded pets range
– Strengthened our own-brand offering with the
launch of Citeco
– Expanded Frame and Truss offering
– Continue to innovate and introduce new products
and categories to expand the addressable market
– Expand Bunnings Marketplace offering
– Optimise space instore to ensure the right products
in the right locations
– Invest in technology to optimise inventory and supply
chain management to improve stock availability
Deliver best
experience
– Opened three net new Bunnings stores, three
Tool Kit Depot stores and one Beaumont Tiles
store and closed one Bunnings Trade Centre
– Expanded three stores to improve the local
offer
– Continued focus on removing non-customer
facing tasks in stores so teams can spend
more time with customers
– Enhanced online search functionality to
improve ease of shop
– Used data more effectively to improve and
personalise the customer experience
– Network expansion opportunities across Bunnings,
Tool Kit Depot and Beaumont Tiles
– Innovate and simplify to improve efficiency and
reinvest in service
– More personalised digital communications
– Make instore service even easier and more
convenient for customers
– Continue to develop fulfilment and last mile
capabilities
Making a
positive
difference
– Good progress made towards 100 per cent
renewable electricity by 2025
– Assistance for local communities and
emergency services following natural disasters
– Continued to support local communities
through community BBQs, hands-on local
projects, DIY workshops and instore
family events
– Focus on achieving net zero Scope 1 and 2
emissions by 2030
– Continue to strengthen support for local communities
through community BBQs, hands-on local projects,
DIY workshops and instore events
28
Wesfarmers 2023 Annual Report
Risk mitigation
Bunnings recognises that taking appropriate business risks is a critical aspect of generating acceptable business returns. In doing so,
it seeks to appropriately manage risks to minimise losses and maximise opportunities.
Bunnings recognises climate change as a key risk (and opportunity) which is discussed elsewhere within this annual report.
Risk
Mitigation
Safety
– Continued focus on critical safety risks, robust safety systems and targeted training and awareness
campaigns
– Focus on how we move product safely through our supply chains, our warehouses and to the customer
– Strategies, processes and training for protecting team members from threatening situations
Talent
recruitment
and retention
– Strategies directed at creating and maintaining status as an employer of choice
– Creating a welcoming environment for everyone through continued focus on diversity and inclusion
programs, and respectful workplace training
– Succession planning, retention and targeted development plans
New and
existing
competitors
– Relentless focus on strategic pillars of lowest price, widest range and best experience
– Ongoing strategies to increase customer centricity and deepen customer engagement
– Focus on digital transactional capability
Reputation
– Strong culture of ‘doing the right thing’ supported by training and policies
– Focus on responsible sourcing and product standards
– Ongoing regulatory compliance training
Supply chain
resilience and
disruptions
– Structured range review processes incorporating alternative sources of supply
– Continued development of domestic supply chain capabilities and continued strengthening of processes
and systems
Data, privacy
and cyber
security
– Strategy built around protection, detection and responding to cyber threats
– Use of leading technology to protect against cyber incidents
– Strong internal processes to protect and control data access
Wesfarmers 2023 Annual Report
29
Operating and
Financial Review
Risks deemed unacceptable in terms of the business’ risk appetite are subject to appropriate control and mitigation measures to reduce
the potential negative impact on the business. The level of controls implemented is commensurate with the potential impact on the
business from the risk occurring (taking account of likelihood and consequence).
Operating and financial review | Kmart Group
Kmart Group
Kmart Group comprises retail businesses Kmart
and Target, with operations across 449 stores
in Australia and New Zealand and around
50,000 team members. Kmart and Target are
supported by KAS Group Asia through direct
sourcing and global wholesale operations.
30
Wesfarmers 2023 Annual Report
Our business
Highlights and outlook
Kmart
Revenue1
…