Owners of Wesfarmers Ltd (ASX: WES) shares had a wonderful year in 2024, with investors significantly wealthier now than at the start of the year.
As the chart above shows, the Wesfarmers share price climbed 24.4% in 2024. That's a great return, in my opinion. The S&P/ASX 200 Index (ASX: XJO) went up approximately 7.5% last year, which was a solid return too. But Wesfarmers was the clear winner.
The ASX retail conglomerate can probably thank its key businesses of Kmart and Bunnings for this stellar performance in 2024. Of course, every underlying brand contributed to the performance, including Officeworks, Australian Pharmaceutical Industries (including Priceline), chemicals, energy and fertilisers (WesCEF), and industrial and safety.
However, a few different events occurred during 2024 that may have influenced Wesfarmers' shares. Let's take a look.
Inflation
Wesfarmers is one of the biggest businesses in Australia, so it is impacted by changes in the economy.
The high cost of living has hurt Aussie household finances, so according to the company, Kmart and Bunnings' value offerings allowed the business to capture market share in 2024.
But, we're now also seeing inflation reduce in Australia compared to the highs seen a couple of years ago. The Australian Bureau of Statistics (ABS) reported last year that inflation for the 12 months to October 2024 was 2.1%, and the annual trimmed mean was 3.5%.
Some investors may have hoped in 2024 that a drop in inflation may lead to an interest rate reduction.
Solid results
Despite the economic challenges and reduction of construction activity in Australia, Wesfarmers' FY24 result and FY25 update were positive.
In the 2024 financial year, Wesfarmers reported that revenue grew by 1.5% to $44.2 billion, and net profit after tax (NPAT) increased 3.7% to $2.6 billion. Within that, Bunnings Group's operating profit grew 0.9% to $2.25 billion, and Kmart Group's operating profit jumped 24.6% to $958 million.
Wesfarmers advised the market at its annual general meeting (AGM) that sales trends from the second half of FY24 had continued into FY25. Kmart continues to perform strongly, while Bunnings and some other businesses are still seeing sales growth.
Revenue is a key driver of profit growth, which is essential for Wesfarmers' share price growth over time.
In FY24, the business paid an annual dividend per share of $1.98.
Coregas sale
The company's last important announcement in 2024 was the sale of its Coregas business to Nippon Sanso Holdings Corporation (NSHD) for $770 million.
While Coregas wasn't an essential part of Wesfarmers' business, it is a useful bonus for the balance sheet.
Wesfarmers share price snapshot
Since the start of 2025, the Wesfarmers share price has risen by more than 2%, adding to the strong returns from 2024.
