00:00Rob thanks so much for joining us today and as I was outlining there such a large chunk of your
00:04business does come from that retail arm and inflation continues to be an issue do you see
00:10cost pressures starting to stabilize going forward? Well Paul not necessarily I think
00:17inflation well it has been quite persistent and there are a number of capacity constraints facing
00:23the Australian economy so we are starting to see that customers are being put more value conscious
00:29this is whilst this is a challenge economically in Australia it's a challenge for households
00:35our businesses are really well positioned to help households make ends meet we we keep our prices
00:45very low we have an everyday low price policy across businesses like Budding's and Kmart so
00:50historically we've actually performed quite well in these environments by virtue of really staying
00:56focused on what customers are looking for which is low prices and our strong focus on productivity
01:02across the group enables us to deliver low prices and continue to grow profits so although the
01:08environment is tough we feel that our businesses are very well positioned to compete in this environment
01:16yeah I'm wondering if you're noticing a behavior in consumer sentiment across your retail portfolio and
01:22are consumers changing their approach to discretionary versus essential spending what's your data telling you
01:29well the data has shown that certainly after the last interest rate increase so as you know inflation
01:36has proven to be quite persistent we currently have inflation tracking at almost double the level of
01:42economic growth in Australia and as a result of recent interest rate increases we are seeing customers be more value
01:49conscious
01:50so we've seen that play out that more customers on the positive side for our businesses more customers are shopping
01:56in our brands
01:57as they look for value but I guess lower income households have less money to spend so putting fewer items
02:04in their basket
02:05so there are some challenges there and that is why just in recent weeks we were anticipating these financial challenges
02:13for the economy so we have dropped the prices of thousands of items across Kmart, Bunnings and Officeworks
02:22and these were scheduled price decreases really to help customers at a time when value is really important
02:29Well you've previously made remarks about the role of interest rates and how it impacts on consumer sentiment as well
02:36I mean do you see a case for monetary easing or is this more a story of structural cost pressures
02:42that are much harder to address than that
02:45Well Paul I think there are a number of factors that are contributing towards inflation
02:50and whilst monetary policy is one mechanism to address that
02:55we shouldn't underestimate the challenge that we have in Australia with capacity constraints in areas such as housing and energy
03:02so we have a shortage of housing we're seeing housing prices go up
03:07certainly what we are focused on within our Bunnings business is trying to bring greater affordable solutions to homeowners
03:14as they think about expanding and renovating and building their homes
03:18so housing affordability is a challenge, energy prices have been going up
03:23so I would say that both addressing capacity constraints
03:27also really supporting a stronger productivity agenda across the economy
03:33those will be very important points if we are to start to get inflation under control
03:40Well you're also one of Australia's largest employers as well and in a tight labour market
03:46you know what are you facing in terms of hiring
03:49and are you experiencing any wage pressures?
03:52Are employees demanding more?
03:56Well one of the benefits that we have in Australia is we have relatively low unemployment
04:00which is a good thing we are seeing some shortages of key skills in some areas
04:05look overall we have benefited across our businesses because we are seen as an employer of choice
04:11we do pay well we also provide additional benefits and incentives
04:16and we share the benefit of our financial performance with our teams through shares and other incentive programs and benefits
04:24so overall in West Farmers we feel pretty good about the engagement of our team and our capacity to attract
04:31talent
04:32where it becomes more of a challenge is as a nation as we're considering developing new assets
04:39developing new projects really leaning into the opportunity that will be afforded through new technologies
04:45and gerative AI and so forth
04:48these are areas where we do have some shortages in skilled labour as a country
04:53so there are some challenges but overall in West Farmers I feel that we're pretty well
04:57pretty well equipped to face into the opportunities and challenges
05:03Yeah can you tell us a little bit more about those technological developments
05:06you know how West Farmers is positioning itself during this digital transformation
05:10use of AI tools and you know can you see a way that AI could improve the customer experience?
05:18Absolutely and West Farmers has already been on a multi-year journey to digitise a lot of business processes
05:25we've invested heavily in building out our data capabilities and digital platforms
05:30and our team members are already very engaged in the digitisation of businesses to really work smarter not just harder
05:39and now the opportunities afforded through gerative and agentic AI I think are going to be very powerful for businesses
05:47like ours
05:48we've just recently entered into some strategic partnership agreements with Google and Microsoft
05:53which will bring some of the best of the developing technologies in this space to our businesses
05:59and we see great opportunities to really empower our team with digital tools to enable them to work smarter
06:07also opportunities in the agentic commerce space so that customers that want to engage with our brands
06:14through large language models will be able to do so in a really seamless way
06:18so lots of opportunities we're very excited about it
06:22and we see it as a way of delivering even greater value to our customers whilst accelerating the growth of
06:28West Farmers
06:30Well of course West Farmers isn't just about retail you're a very diversified conglomerate as well
06:35and I'm wondering if you can tell us a little bit about your lithium business
06:37because the recent lithium downturns lasted a long time
06:40how is West Farmers CEF ensuring it can weather similar cycles?
06:48Well when we first invested in lithium we did so with a very long-term view
06:53we invested a number of years ago
06:55we've undertaken a greenfield development of an integrated mine concentrator and refinery
07:00and we're actually really pleased how that's progressing
07:03so it was a major milestone to get our mine and concentrator
07:09well we're almost up to nameplate capacity
07:13and we delivered our first profit for the first half
07:16and we're confident of increasing that profit for the full year
07:20so a lot of things are going well there
07:22we are taking a long-term view
07:24we still have some work to do to get our refinery operating
07:27we've had a lot of positive progress
07:29but to commission a refinery is quite a complex process
07:33so we're generally pleased with the direction of travel
07:36and I should also note that our chemicals energy and fertilizer business
07:41continues to expand the productive capacity of key components
07:47such as our ammonium nitrate business and sodium cyanide
07:50which are critical ingredients to growing and important markets
07:54for Australia such as iron ore production and gold
07:57thank you
Comments