Owners of Wesfarmers Ltd (ASX: WES) shares will want to know about what the company is predicted to report in its upcoming FY24 result.
The company is scheduled to release its report on 29 August 2024.
There are a lot of moving parts within the Wesfarmers business, which includes Bunnings, Kmart, Target, Officeworks, Priceline, Catch, WesCEF (chemicals, energy and fertilisers) and so on.
Recent updates from the business have been promising, with indications that the business is still delivering sales growth.
Let's look at what some analysts think is projected for the 12 months to 30 June 2024.
FY24 forecasts
The broker UBS is predicting that FY24 revenue could increase by 1% year over year to $43.97 billion.
The sales growth could help total earnings before interest and tax (EBIT) increase by 3.8% to $4 billion. The 2024 financial year net profit after tax (NPAT) is projected by UBS to grow by 4% to $2.56 billion. UBS analysts are expecting earnings per share (EPS) growth of 3.7% to $2.26.
This profit growth can help fund a larger dividend for owners of Wesfarmers shares, according to UBS' projections. The business is forecast to pay an annual dividend per share of $1.99, which would be an increase of 4% year over year.
At the current Wesfarmers share price, that payout would represent a fully franked dividend yield of 2.7% and a grossed-up dividend yield of 3.8%.
In terms of the balance sheet, the broker is projecting that FY24 finished with net debt of $10.7 billion.
Latest commentary
After seeing the annual strategy briefing day, UBS noted that a growing number of Wesfarmers' customer cohorts are "challenged", while cost inflation "appears more enduring."
Bunnings and Kmart are the two major profit generators of the business, so let's concentrate on the commentary for these two segments.
Bunnings' growth is being aided by new and expanded product ranges (such as pet, rural, and auto), improved use of retail space, an improved omnichannel customer experience, an improved commercial offer, and supply chain improvements. The age and supply of housing, as well as population growth, are tailwinds for Bunnings.
Looking at Kmart, UBS pointed out that there are a number of ways the discount retailer is leveraging growth in customer numbers as they seek better value products. Customers are shopping at Kmart more frequently and buying a wider variety of products.
Kmart's brand, Anko, is benefiting from growing scale, which is enabling better products at lower prices. Anko is also broadening existing ranges to attract more customers. The international wholesale segment of Anko, and the small-format offering, provides "long-term optionality".
UBS also said that Officeworks can grow by extending its technology range and entering new categories, which can accelerate the replacement cycle.
On Wesfarmers' lithium efforts, the broker said the Kwinana refinery was 75% complete with the first production expected in the first half of the 2025 calendar year. Doubling the Mt Holland mine and concentrator capacity requires regulatory approval.
Wesfarmers share price snapshot
Since the start of 2024, the Wesfarmers share price has risen by 30%.
