General merchandise retailers are often characterised as high volume and low margin, depending on the market positioning of their products and brands and more susceptible to economic cycles because of the discretionary nature of the products they sell. Companies try to build economies of scale by developing national retail networks that optimise their buying power and supply chain efficiencies. Energy and chemical companies are often characterised by their sensitivity to international commodity prices, foreign currency and the underlying supply and demand for their end products. Companies try to mitigate the risks with the use of hedging contracts and by moving their products up the value chain and continually increasing productivity and efficiencies. Specifically, WES has indicated its near-term focus is to: strengthen its existing businesses by ensuring operational excellence and a customer focus; secure growth opportunities through entrepreneurial initiatives; renew its portfolio of businesses through value-accretive transactions; and ensure business sustainability by having a responsible long-term investment perspective .
WES's retail businesses compete with a range of bricks and mortar and online retailers including: Woolworths' Big W, Myer and David Jones in Australia and The Warehouse in New Zealand for general merchandise and various specialty apparel and homewares retailers including the NoniB group of branded retailers, Adairs, Harvey Norman, The Good Guys; Metcash’s Mitre10 and Fletcher Building’s PlaceMakers in Australia and New Zealand for hardware; Office Products Depot and Office Max in Australia for stationery and office supplies. WES's energy, chemicals, fertiliser and industrial products businesses compete with: Origin Energy, Elgas and DCC liquefied petroleum gas supply and distribution businesses in Australia; Wengfu and Koch fertiliser production and distribution operations in Australia; and Alexium, Jasol and Nufarm chemical manufacturing and distribution businesses in Australia.
WES has successfully established a diversified Australasian business, giving it some ability to allocate more of its resources to sectors with favourable demand drivers. Going forward, it should continue to benefit from increased sales and economies of scale through organic growth, expanding its portfolio and geographic presence, optimising its operations and supply chain as well as undertaking complementary and value-accretive acquisitions. Its possible downside commercial risks could include: a broader economic slowdown that could affect different parts of its overall business such as the propensity of consumers to purchase discretionary products from its retail networks, farmers to purchase fertilisers and chemicals and other industrial customers to purchase natural gas and equipment from its manufacturing facilities; an inability to adapt to structural changes within the retail industry with increased online purchases, changes in consumer trends, new instore consumer experiences and the introduction of multinational competitors; erosion of market share and gross margins from other multinational and domestic competitors; loss of a key customer, supplier or employee; lower energy, fertiliser and chemical prices or any unfavourable changes to the availability, quality and delivered price of products and third party supplier costs that are unhedged and cannot be passed on to customers through pricing increases; an appreciation of the AUD, which would lower the unhedged value of its exports and any foreign capital it chooses to expatriate back to Australia (equally however, this could lower the AUD-equivalent cost of any products imported and sold within Australia); and any inheritance of undue liabilities or commercial risks through new product offerings, store openings, acquisitions and entrances into new markets.
2000: Westralian Farmers was founded in 1914 by Charles Harper and his son, Walter Harper, as a farmers co-operative based in Western Australia. It quickly became the region’s largest marketer of livestock, wool, milk, wheat and other grains and for a time, its operations extended to irrigation, forestry, insurance, real estate, mail and logistics, shipping and exporting, fertiliser and chemicals production, oil distribution and public radio. Westralian Farmers was renamed The Westralian Farmers’ Co-operative in 1946 and Wesfarmers in 1984, shortly before it was listed on the Australian Stock Exchange (WES.AX). In the intervening years, WES also acquired and merged a number of independent convenience stores into Masters Dairy, formed a bottled LPG distribution company called Kleenheat Gas and acquired the majority of a superphosphate manufacturer called CSBP
WES entered the home improvement sector in 1987 through the 10% acquisition of Bunnings, an Australian timber and hardware retailer. It also entered the coal mining sector through the acquisition of Western Collieries in 1989 and the 25% acquisition of the Bengalla Coal Deposit in 1991. WES continued to expand its portfolio and by 2000 it had acquired: a rural insurance underwriting company called Federation Insurance; two agricultural product distribution companies, Dalgety Farmers and IAMA, which it consolidated and renamed Wesfarmers Landmark; the remaining interest in Bunnings and another hardware chain called McEwans; a road and rail logistics company called Total West Transport; a government owned railroad company called Westrail Freight, which it renamed the Australian Railroad Group; and a third coal mine called the Curragh coal mine
2001: WES chose to sell all of its forestry and logistics interests after determining they were no longer core to its overall portfolio. Towards the end of the year, it acquired and integrated the Australian-listed conglomerate Howard Smith, which itself owned over 100 BBC Hardware home improvement stores, an industrial products distribution business called Blackwoods and other interests in coal mining and steel production. It also entered the electricity generation sector through the 65% acquisition of StateWest Power, which it later renamed enGen
2003: WES accepted an unsolicited offer for Wesfarmers Landmark and towards the end of the year, it acquired the Australian and New Zealand insurance underwriting operations of Lumley Insurance
2006: WES continued to expand its insurance interests through the acquisition of two insurance broking firms, OAMPS of Australia and Crombie Lockwood of New Zealand. It also sold the Australian Railroad Group and acquired an Australian specialty gas production and distribution company called Landa Gas, which it renamed Coregas
2007: WES undertook its largest transaction to date, acquiring the Australian-listed Coles Group. Following the acquisition and subsequent integration, its portfolio comprised of approximately: 700 Coles and Bi-Lo supermarkets and petrol stations; 800 LiquorLand, Vintage Cellars and First Choice Liquor Superstore outlets; 100 Spirit hotels, pubs and clubs; 250 Bunnings home improvement stores; 100 Officeworks and Harris Technology stationary and office supply retailers; 300 Target affordable clothing and consumer product stores; 200 Kmart general merchandise stores; 250 industrial products distribution centres operating under the Blackwoods, Bullivants and various other brands; the Coregas and Kleenheat LPG and LNG production and distribution companies; the enGen electricity generation business; the Curragh coking coal mine, Premier thermal coal mine and a 40% interest in the Bengalla thermal coal mine; the CSBP and partly owned Queensland Nitrates (QNP) fertiliser production and distribution companies; the Australian Vinyls and AGR industrial chemicals production and distribution businesses; the ModWood plastic and wooden composite decking company; the partly owned Wespine softwood sawmill; the OAMPS, Crombie Lockwood, Lumley and Westfarmers Federation Insurance (later rebranded as Coles Insurance) insurance broking underwriting businesses; and a cornerstone investment in the Gresham Private Equity Fund
2011: WES sold its electricity generation business, enGen, to Australian-listed Energy Developments and its Premier thermal coal mine to Australian-listed Austar Coal Mines. It also closed the last of its Harris Technology stores, which it had been gradually rebranding and closing for several years
2013: WES chose to sell its two insurance underwriting businesses, Lumley and Coles Insurance, to the Insurance Australia Group (IAG) and its two insurance brokering businesses, OAMPS and Crombie Lockwood, to Arthur J Gallagher & Co (AJG). It also began to sell and lease-back some of its Coles and Bunnings properties
2015: WES acquired a complimentary industrial workwear manufacturing and distribution company called The Workwear Group from Australian-listed Pacific Brands. It also acquired an integrated a risk management and compliance advisory called Greencap, and acquired a minority shareholding in an oil and gas exploration and processing company called Quadrant Energy
2016: WES first entered the European home improvements market through the acquisition and gradual rebranding of over 250 of Homebase. It also closed the last of its Bi-Lo supermarkets, which it had been rebranding and closing since they were acquired in 2007
2018: WES chose to sell its Curragh coal mine to the Coronado Coal Group and its European Homebase and Bunnings operations to a company associated with Hilco Capital, following respective strategic reviews of these divisions. It also announced its intention to demerge its 800 Coles supermarkets and petrol stations, 900 LiquorLand, Vintage Cellars and First Choice Liquor Superstore outlets, and 100 Spirit hotels, pubs and clubs in 2019
2019: WES completed the exit of all of its coal activities with the sale of its 40% interest in the Bengalla coal mine. It also sold its Kmart Tyre & Auto Service business, its minority interest in Quadrant Energy and completed the demerger of Coles, in which it retained a 15% shareholding as well as a 50% interest in Loyalty Pacific. WES made a non-binding proposal to acquire Lynas, a rare earth minerals company in Australia, which was later withdrawn. WES acquired Australian-listed Kidman Resources, which owned a 50% interest in the Covalent Lithium Project. WES acquired Catch Group, a profitable digital marketplace to complement its general merchandise division
2020: Following the demerger, WES chose to gradually sell down its shareholding in Coles from 15% to 5%. The global COVID-19 pandemic forced many countries to temporarily close borders and restrict people’s movements. This caused major disruptions to supply-chains, employment and consumer demand in almost every sector. WES chose to keep its stores in Australia open during this time while its New Zealand stores were required to shut for several weeks. During the 2nd wave, its stores in Victoria were forced to shut.
2022 : WES expanded into specialty healthcare retailing by acquiring Australian Pharmaceutical Industries (API) which retails, wholesales and distributes pharmaceutical products and health and beauty merchandise