The Wesfarmers Ltd (ASX: WES) $2.3 billion capital return has so far failed to excite investors this morning. The hefty return to shareholders comes following a strong full-year result from the Aussie conglomerate.
However, the Wesfarmers share price is down 2.3% at the time of writing, trading at $62.49. Let's take a look.
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What you need to know about Wesfarmers' $2.3 capital return
In case you missed it, Wesfarmers released its results for the year ended 30 June 2021 (FY21) this morning. Some of the key takeaways from the update include:
- Revenue up 10.0% on the prior corresponding period (pcp) to $33,941 million
- Earnings before interest and tax (EBIT) up 18.8% on pcp to $3,776 million
- Net profit after tax up 16.2% on pcp to $2,421 million
- Free cash flow down 47.2% on pcp to $2,741 million
- Basic earnings per share (EPS) up 16.2% on pcp to 214.1 cents
- Full-year, fully-franked dividend up 17.1% on pcp to 178 cents
In addition to the above, Wesfarmers announced a significant capital return to shareholders. That is set to come in the form of a 200 cents per share payment on top of the company's final dividend.
The $2.3 billion capital return to Wesfarmers shareholders comes after years of speculation about the Wesfarmers mergers and acquisitions (M&A) war chest.
Strong performance
Today's result was backed by strong divisional performance from Bunnings, Kmart Group, Officeworks and Industrial and Safety. The largest EBIT growth was recorded by Kmart (+69.0%) and Industrial and Safety (+79.5%).
Wesfarmers gave approval alongside its joint venture (JV) partner to commence construction at the Mt Holland lithium project. First production of lithium hydroxide is expected to start in the second half of the calendar year 2024.
The Wesfarmers capital return, in addition to the final dividend, will give shareholders a total distribution of 378 cents per share. That wasn't enough to boost the Wesfarmers share price higher on Friday as investors weighed up the news against future growth opportunities.
