Retail conglomerate Wesfarmers Ltd (ASX: WES) is holding its annual Strategy Day briefing in Sydney today.
The day is an important one for investors and analysts as it provides an opportunity for the heads of each of the group's major divisions to outline their vision and strategy for the businesses they oversee.
While the strategy is the key determinant of the future value of the company, its past performance may provide some insights into what could reasonably be expected.
Here are five key facts presented during the briefing:
- The total shareholder return to 31 May 2016 since Wesfarmers listed on the ASX in November 1984 has equated to a 19.7% compound average growth rate (CAGR) per annum (pa). In contrast, the ALL ORDINARIES (Index: ^AXAO) (ASX: XJO) has returned 10.8% CAGR pa over the same time period.
- The Bunnings business (arguably the most successful division of the group) has achieved a CAGR in sales of 16.5% pa over the period 1995 to 2015. Meanwhile, the earnings before interest and tax CAGR over the same time period has been a staggering 20.3% pa.
- Despite its size and the outstanding growth rates achieved by Bunnings, the estimated market penetration of Bunnings is still just 19% of the Australian home improvement and outdoor living market. The group is confident that there is scope for many more years of growth ahead.
- Wesfarmers has provided shareholders with $14.1 billion in dividend payments and capital management distributions since financial year (FY) 2010.
- The forecast FY 2016 cost of debt has declined to around 4.4% compared with 5.5% in FY 2015.
