Ladies and gentlemen, thank you for holding and welcome to the Wesfarmers 2026 full year results briefing. Your lines will be muted during the briefing. You will have an opportunity to ask a question immediately afterwards, and instructions will be provided on how to do so at that time. This call is also being webcast live on the Wesfarmers website and can be accessed from the homepage of wesfarmers.com.au. I would now like to hand the conference over to the Managing Director of Wesfarmers Limited, Mr. Rob Scott.
Thank you very much and hello, everyone. Welcome to our 2026 full year results briefing. I am joined on this call with our divisional Managing Directors and our CFO, Anthony Gianotti. I will start with a summary of the group's performance, followed by some comments on our strategic progress over the last year. I will then hand over to Anthony to talk in more detail to our financials. I will then conclude with some perspectives on our portfolio positioning and the outlook for the group. Anthony, the divisional MDs, and I would be delighted to take your questions.
Starting on slide four, a slide that will be familiar with many of you. It sets out Wesfarmers' primary objective, which is to deliver a satisfactory return to shareholders. We define satisfactory as a top-quartile total shareholder return over the long term. We only believe it is possible to achieve long-term value by anticipating the needs of our customers, looking after our team members, engaging with suppliers in a fair and ethical manner, contributing positively to the communities where we operate, taking care of the environment, and acting with honesty and integrity. In the last year, our businesses have continued to make good progress in each of these areas.
Turning to slide five. This year, we reported net profit after tax of AUD 2.9 billion. Excluding significant items in the prior year, this represents an 8.3% increase for the year. This growth was underpinned by strong earnings contributions from our largest divisions, Bunnings, Kmart, and WesCEF. The result reflects the resilience of our businesses and the strong execution of our growth and productivity agendas. Many of you will have heard me talk about the virtuous cycle at the heart of the Wesfarmers model.
By running our businesses as efficiently as possible and keeping our costs low, we are able to keep prices low for customers and continue to invest in new capabilities and platforms. This investment helps to build stronger businesses for the future, creating fulfilling jobs for our team, all while delivering better returns to shareholders over the long term. As a result of the pleasing growth in profit, the Board has determined to pay a fully franked final dividend of AUD 1.20 a share, which brings the total dividend for the year to AUD 2.22 per share, a 7.8% increase.
Turning to slide six. While we are pleased with our financial results, they really only tell part of the story. Over the past year, we've continued to invest in our existing businesses while building new businesses and revenue streams for the future. This slide outlines these areas. Firstly, with our existing businesses, our focus is very much on reaching more customers and serving them better. Strategic partnerships with leading global technology companies have ensured that our team members have access to world-class tools that support them to be more efficient and to direct time to higher value tasks.
In agentic commerce, we've launched AI-powered shopping assistants, Buddy at Bunnings, Joy at Kmart, and Ollie at Officeworks, and applications that help team members, especially in retail settings, to better serve our customers. Across the group, the use of AI is all aligned with our people-first digitally enabled approach, which puts our team and customers at the center. We continue to bring more value and choice to customers as we renew and expand our offer at Bunnings, Kmart, and Officeworks.
We're also investing in new store formats, including the Kmart Plan C+ renewals, K Home, and Atomica and Health. Investments in distribution and fulfillment centers and new express delivery options make our online offer faster and more reliable. We're also building new platforms that extend our growth beyond our existing businesses. At WesCEF, the expansion of Mt Holland, which we announced in July, is expected to double spodumene concentrate production, lowering unit costs and accelerating cash flows.
Our growing retail media business continues to expand using the scale of our store network and customer reach to generate a new source of earnings. The new marketplace at Kmart and the developing marketplace at Bunnings are delivering very strong growth and provide customers with more choice across hundreds of thousands of additional products. The Built Living joint venture is progressing and will deliver residential apartments faster, at a lower cost, and at scale through advanced manufacturing.
Turning to slide seven, which provides some of the divisional highlights for the year. I'll let Anthony talk to this in more detail, but I just wanted to touch on an important portfolio action through the year. On July 1st, our industrial and safety businesses transitioned to Bunnings Group. This brings together businesses with market-leading positions and highly complementary customer bases and will enhance customer offers, drive incremental sales, and unlock cost efficiencies.
We see this as a significant opportunity for Bunnings to strengthen its commercial capabilities and accelerate growth with small to medium-sized customers. This is another example of our focus on creating long-term value through disciplined portfolio management. Before handing over to Anthony, I just wanted to turn to slide eight. Consistent with our objective, this slide sets out some of the broader progress during the year in the areas of team, community, and environment. On safety, the group TRIFR has improved from 9.5%- 9.1% at year-end, with WesCEF delivering a record result of 0.6%.
Across the group, 4% of Australian team members identify as Aboriginal or Torres Strait Islander people, maintaining employment parity. We were proud to recently release our Ninth Reconciliation Action Plan, which was our second at the Elevate level. And we've also made good progress on climate resilience, reducing group scope one and two market-based emissions by over 20% during the year. This step change was underpinned by our retail divisions achieving their 100% renewable energy electricity targets in the 2025 calendar year. Now, with that, I'll move to slide nine and hand over to Anthony.
Thanks, Rob. Hello, everyone. I'll start on slide 11, where we've provided some further details on the sales performance across each of our divisions. I'll speak to performance across each of them in more detail on slide 12. Overall, it was pleasing to see sales growth achieved across all of our divisions in the financial year. In our retail businesses, the group's well-established everyday low price operating models continued to resonate with consumers, supporting transaction growth across all of our businesses.
Our marketplace has delivered strong growth in the year, extending our reach across e-commerce channels with gross merchandise value across Bunnings and Kmart marketplaces now exceeding AUD 250 million. [GMV] and Bunnings marketplace grew more than 25%, reflecting strong demand for home and living categories and an increase in the number of vendors on the platform. On slide 12, at a group level, divisional earnings increased 6.2% for the year, supported by strong results in Bunnings, Kmart Group, and WesCEF, and positive momentum in Health.
Our retail businesses continue to execute well, and their ongoing focus on productivity and cost discipline supported continued investment in low prices and customer experience, while also delivering operating leverage, with earnings growing faster than sales. I'll now step through the divisional results in a bit more detail. In Bunnings, sales growth of 3.9% was supported by Bunnings' lowest price positioning, which underpinned sales growth across both consumer and commercial customers and across all product categories and regions.
Consumer sales growth was supported by strong demand for home repair and maintenance products, while range innovation and expansion drove strong sales growth in the tools, automotive, rural, pet, and lifestyle categories. Growth in commercial sales reflected resilient demand as Bunnings strengthened its proposition through faster fulfillment and specialist services. Digital sales grew across all channels, with Marketplace continuing to deliver strong growth, benefiting from the launch of the Bunnings commercial and services marketplaces during the year.
Bunnings continued to progress a range of productivity initiatives, which strengthened its cost discipline and allowed further investment in price. Bunnings' earnings, excluding property contributions of AUD 2.45 billion, represented an increase of 5% for the year. Kmart Group delivered earnings of AUD 1.1 billion for the year, an increase of 6%. Kmart Group's strong value credentials and world-class product development continued to resonate with customers, with prices dropped on more than 2,500 items during the year. Product innovation in Anko's One Up and Two Up price tiers also continued to generate strong demand.
Comparable sales growth in the second half reflected more challenging conditions for seasonal categories in the fourth quarter and the impact of a material deterioration in the exchange rate on Kmart's New Zealand dollar-denominated sales. Adjusting for the New Zealand dollar impact, comparable sales growth for the second half was above the first half. Strong earnings growth reflected Kmart Group's focus on productivity and cost control, which mitigated the impact of ongoing cost of doing business pressures during the year.
WesCEF's earnings increased 18.5% to AUD 473 million for the year, driven by higher prices for nitrogen-based products and spodumene concentrate. In Chemicals, earnings decreased on the prior year due to the rapid rise in ammonia index pricing following escalation of the Middle East conflict. Given the price lag in sales contracts, this significantly impacted earnings in the second half but will provide a benefit as index prices normalize into the 2027 financial year. In Energy, earnings decreased due to a lower Saudi CP price.
In Fertilizers, earnings increased on the prior year, which was supported by a strong end to the 2025 season, partly offset by increased import costs in the second half of the financial year, again due to the Middle East crisis. In Lithium, the business delivered its first positive earnings with a profit of AUD 40 million, which was driven by higher market pricing for spodumene concentrate and above nameplate production at the Mt Holland mine and concentrator. Ramp-up of the refinery and the progression of qualification activities were affected by intermittent odor issues, with the installation of mitigation measures initiated late in the financial year.
In Officeworks, sales increased 3.7%, and earnings of AUD 165 million were 22.2% below the prior corresponding period, but in line with our previous guidance. Earnings were impacted by approximately AUD 40 million in one-off costs associated with its transformation program, largely reflecting restructuring activities and the ERP-related costs. Successful execution of the program will structurally lower the cost base and provide a foundation for improved performance. The program remains on track for completion by the end of this calendar year.
Wesfarmers Health continued to focus on its transformation program to accelerate growth and improve returns. Earnings of AUD 92 million, excluding purchase price accounting adjustments, increased 12.2% on the prior year. Priceline Pharmacy's headline network sales increased 12.7%, which includes both retail and dispensary sales. Priceline's retail sales were supported by a positive customer response to differentiated beauty, skincare and private label ranges, and competitive pricing on key value lines.
Digital sales also grew strongly, supported by the launch of the new Priceline Pharmacy app. MediAesthetics also delivered profitable growth, supported by a simplified operating model, and Digital Health maintained strong momentum with growth in InstantScripts, users, and services. In Industrial and Safety, excluding Coregas, earnings increased 16.9% to AUD 76 million, supported by a strong performance in Blackwoods, which delivered growing share in a challenging market, and higher earnings from Workwear Group.
As Rob's already mentioned, Blackwoods and Workwear Group have transitioned into Bunnings from July 1st this year, and as a result, the Industrial and Safety division will no longer continue as a separate division, and the financial contribution from these businesses will be included in Bunnings' result moving forward. Turning now to slide 13. Our other businesses and corporate overheads reported a loss of AUD 170 million, which was in line with the prior year. The group's share of profit from associates and joint ventures increased by AUD 42 million- AUD 106 million, primarily driven by favorable property revaluations from the BWP Group, and improved contribution from the group's investment in Flybuys, Wespine, and Gresham.
Group overheads were broadly in line with the prior year, while other corporate earnings decreased by AUD 27 million. This decrease primarily reflected a lower group insurance result and the loss of BWP management fees following its internalization earlier in the year. Other EBIT includes the operating costs and investment in Wesfarmers OneDigital, comprising our OnePass membership program, acceleration of our group AI initiatives, investment in the group's customer and data insights capabilities, and the group's retail media network. Total investment across these initiatives for the year was AUD 73 million.
As we said previously, the benefits from these investments will continue to be realized through incremental sales and earnings in our businesses. Turning to working capital and cash flow on slide 14. Group operating cash flow finished 6.5% lower than the prior year due to deliberate investments in working capital in WesCEF and Health. These investments were temporary decisions our divisions made to strengthen availability to customers.
In Health, inventory contingency was increased to protect ethical supplies against supply chain disruptions due to the Middle East conflict. Similarly, in WesCEF, investment in additional fertilizer inventory at elevated prices to minimize the impact of supply chain disruptions from the conflict in the Middle East adversely impacted operating cash flows. WesCEF also held higher spodumene inventories, which will be used as feedstock in preparation for the ramp-up of the Covalent Lithium refinery.
Across our retail divisions, cash realization remained strong at 99%, reflecting disciplined working capital management. Overall, inventory remains in a healthy position with good stock availability across the retail divisions. Free cash flow for the year increased 15.8% to AUD 4 billion, with lower operating cash flows offset by the proceeds from the sale of Coregas and the sale and leaseback of seven properties following the wind-up of the BPI restructure during the year. Moving to capital expenditure on slide 15.
The group invested gross capital expenditure of AUD 1.2 billion during the year, which was 4.1% higher than the prior year. The increase reflected major project spend across a number of our divisions. In Kmart and Officeworks, both commenced the development of new omni-channel supply chain facilities. In Bunnings, CapEx included investment in new stores and expansion projects, with an increase in space growth reflecting its focus on optimizing warehouse and smaller format stores. In WesCEF, CapEx included spend on the Covalent Lithium project and the completion of the first phase of the expansion of the sodium cyanide facility.
Proceeds from the sale of property increased for the period, which reflected increased disposals as a result of the wind-up of the BPI structure, which resulted in net capital expenditure for the year decreasing 29% to AUD 779 million. For the 2027 financial year, we are expecting net CapEx for the group to be in the range of AUD 1.3 billion-AUD 1.5 billion, and this includes approximately AUD 200 million of CapEx associated with the expansion of the Mt Holland mine and concentrator, which we announced in July this year, and increased investments as well in new stores, refurbishments, and supply chain across the group.
Turning to balance sheet and debt management on slide 16. The strength of our balance sheet continues to provide the group with significant flexibility and capacity to support future investment. The group's net financial debt increased to AUD 5.3 billion, which reflected the distribution of AUD 1.7 billion associated with the capital management initiative in December last year. We continue to actively monitor the group's debt mix, and we manage exposure to variable interest rates.
Lower average cost of funds for the year reflected lower cash rates for the majority of the financial year, combined with our low fixed rate bond program. Our finance costs, including the component of interest that was capitalized, increased 8% to AUD 202 million. During the year, Wesfarmers' debt to EBITDA ratio increased from 1.7x- 1.9x following the capital management initiative. We have continued to maintain significant headroom against our key credit metrics.
In July, S&P revised the group's credit rating downgrade threshold ratio from 2.75x-3x debt to EBITDA, increasing the group's debt headroom within its current rating. The group retains considerable funding headroom and committed unused bank financing facilities of approximately AUD 1.7 billion. In the 2027 financial year, total borrowing costs are expected to be higher due to higher levels of net debt, increased capital expenditure, and a higher cost of funds. Finally, to shareholder distributions on slide 17.
As Rob's already mentioned, the Board has determined to pay a fully franked final dividend of AUD 1.20 per share, bringing the total dividends to the year of AUD 2.22 per share, fully franked. This is consistent with our dividend policy, having regard to available franking credits, balance sheet position, credit metrics, and cash flow generation. In line with the recent practice, the group does intend to purchase shares on market to satisfy shares that are issued as part of the dividend investment plan. With that, I will now turn back to Rob to cover off on outlook.
Thanks, Anthony. I will turn to slide 19. As said, Wesfarmers' primary objective is to deliver satisfactory returns to shareholders over the long term. What I wanted to do on this slide was really to, in a time when economic conditions are quite challenging for many people, underscore the importance of when businesses like Wesfarmers are generating profits and investing in their businesses, the broader benefit that we play to national prosperity. So we provide salary, wages, and careers to more than 100,000 team members in Australia, with wages of over AUD 6 billion paid last year.
Each week, our businesses serve millions of customers, each seeing value and convenience in the goods and services that our team work hard to offer. In fact, this is probably the greatest source of value that is delivered back to the community through the amazing value we offer to customers. Across our customer base, we also serve 2.3 million Australian business customers across Bunnings, Officeworks, Blackwoods, and Workwear Group. Our divisions help raise AUD 102 million for community organizations across Australia and New Zealand.
We are also one of Australia's largest taxpayers. Last year, we paid AUD 1.6 billion to federal and state governments. This year, we will distribute AUD 4.2 billion to over 470,000 shareholders, with millions more Australians invested through their super accounts. Turning to slide 20. Before I discuss the outlook, I just wanted to make three points on how the group is positioned. First, our portfolio is strong. It consists of high-quality, resilient businesses that allow us to deliver satisfactory returns through the cycle. Second, we are making good progress on our growth and productivity agenda, which allows us to invest more in our customer offer and supports our future growth.
Third, we have exposure to growing demand through our newer platforms with attractive long-term fundamentals, including opportunities in health, lithium, and now modular construction and retail media. Of course, underpinning all of this is our disciplined approach to capital allocation and our strong balance sheet, which, as Anthony said, gives us flexibility to invest in our portfolio and consider new opportunities that may arise over time.
Turning to the group outlook on slide 21. Uncertainty around the outlook for inflation, interest rates, and house prices continues to weigh on consumer and business sentiment. Households are facing persistent cost of living pressures, and higher operating costs are affecting business confidence and investment. We have obviously been calling this out through most of this calendar year. Despite these challenges, Australian consumer demand remains resilient, and Wesfarmers' retail divisions remain well-positioned to deliver on our corporate objective.
Our divisions will continue to mitigate cost pressures through the execution of their productivity agendas. Bunnings, Kmart Group, and Officeworks are well-positioned to grow profitably and win a greater share of customer wallet, supported by their lowest price positioning, expanding addressable markets, and their broad customer appeal. This positioning will be reinforced by the ongoing development of their omni-channel assets and capabilities to drive incremental sales and earnings. For the first seven weeks of the 2027 financial year, Bunnings' sales growth was slightly stronger than the second half of the 2026 financial year, assisted by some unseasonably dry weather in July.
Kmart Group's sales growth was broadly in line with the sales growth experienced in the second half. Officeworks maintained positive sales growth, with sales growth slightly below the second half. Together with our joint venture partner, SQM, we remain focused on ramping up the Covalent refinery while optimizing production and sales of spodumene concentrate. Wesfarmers Health remains focused on executing their transformation program and capitalizing on health and wellness trends to further improve earnings and returns.
Overall, I am really pleased with the group's performance and strong execution of our strategic agenda, and we are well-positioned to navigate a range of economic circumstances given the strength and diversity of the group. Lastly, you would have seen that today we announced that Mike Schneider will retire from his position as MD of Bunnings Group in February next year. I would like to thank Mike for the exceptional contribution he has made to Bunnings and the Wesfarmers Group over many years. Mike will be succeeded by Rachael McVitty.
Rachael will be an excellent leader and bring strong commercial and operational experience. She is currently the Chief Customer Officer where she leads Bunnings' store network and more than 50,000 team members. Rachael has been with the group for 17 years in a variety of roles. I look forward to working with Rachael to continue to deliver Bunnings' strategic agenda.
We will also have more opportunity to celebrate Mike's amazing achievements prior to his retirement later this financial year. This succession process has followed the usual process adopted by Wesfarmers over years, and we are very fortunate to have such a depth of internal talent to draw on across the group. Now, with that, we would be very happy to take your questions.
We will now begin the question- and- answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star, then two. We do ask that you limit your questions to one per caller and that clarifying questions are concise. You may then rejoin the question queue for any additional questions. The first question today comes from Michael Simotas from Jefferies. Please go ahead.
Good morning in W.A. Good afternoon, everyone else. Look, just wanted to try to understand your view on the consumer as they face into your key retail businesses. We sort of look at the outlook commentary and some of the sort of numbers that you have given. Is it fair to say that there has been a slight moderation in demand generally, but it has happened at a fairly moderate rate? Then you have delivered some pretty good operating leverage over the last few years. Do you think in the current environment with demand and cost of doing business inflation coming, you can continue to do that over the coming 12 months?
Michael, it is Rob here. I might make some high level remarks and I will then hand over to Aleks and Mike Schneider just to talk a bit more about the consumer. If you look at our commentary on the economy, the outlook, I would say it is very similar to what we talked about at our strategy day and very similar to what we talked about at the half year. We are not seeing a worsening of conditions. We are actually seeing a continuation of the conditions that we have experienced through much of 2026 calendar year. I think what is important too, I know that you guys focus a lot on seven weeks trading and you try and interpret what does that mean for the year ahead.
I would just provide a bit of caution to how you analyze that. We did call out a couple of factors. Weather is not a reason to celebrate or commiserate results over the long term, but on a week-to-week basis it can have an impact. As John Gualtieri can talk to, the supply of tech products can also have a short-term impact on sales. The point I would like to leave with you is that we are really just seeing a continuation of conditions where customers remain very discerning around how they spend their money and very value conscious given the cost of living pressures. I might hand over to Aleks first and then Mike Schneider to give a bit more color, and they can also talk to your question on operating leverage.
Hi, Michael. Just on consumer, consistent with what Rob said, very much a continuation of the themes that I talked to at the strategy day. The overarching piece is that the importance of value is continuing to grow for our customers. We continue to see them become really focused when they shop and value seeking in their behavior. What does that mean for our business? The trend of fewer items in the basket is what we are seeing. However, the positive is our active customer base continues to grow and our transaction count continues to grow.
But we are definitely seeing customers become more deliberate in their shopping behavior. The other one that has continued within our business is the strong value proposition of our offer and the product innovation and really extreme value within our Two Up price tier continues to resonate very strongly for our customers. When we deliver quality and aesthetic at an extreme value price point, we continue to generate really strong demand for those price tiers within our business.
We feel across all of that, we are extremely well positioned in the current environment to continue to deliver value for customers and continue to grow our share of wallet, and we continue to see growth across all of our customer cohorts, whether that is demographics or affluence levels. From operating leverage perspective, there is a few factors within the result that are continuing within our business. Firstly, we maintain really strong pricing and inventory disciplines across the year and across the second half, which contributed positively to margin outcomes.
It is an inflationary environment from a COGS perspective, but we work really hard with our supplier base to drive productivity across all of our sourcing business. We are also starting to see some benefits from the investments that we are making in shrink reduction initiatives, including our front of store gates across our store network. Clearly, FX is in a more favorable position in terms of mitigating some of the cost inflation we are seeing, both domestically and overseas as well, including the impacts of fuel, which have been a material impact in recent months.
Productivity is very much still on our agenda, and we are delivering really good productivity across our supply chain and across our store network from the ongoing digitization of our operating model, which is also continuing to mitigate some of the inflationary pressures. In terms of the look ahead, a lot of those things are in our base and will continue to play out in FY 2027. Clearly, we have called out an elevated level of investment in FY 2027 related to our Next Gen commissioning. We take over the site in October, which means that we have a period of dual run costs within New South Wales, with no benefit because we won't start to operate the site until early FY 2028.
We haven't quantified the impact of that, but clearly, it's a material enough impact to call out. What it will do is it will impact our ability to deliver operating leverage to the same degree as we have in recent years. However, I'll reiterate what I said at the strategy day, which is we're still aiming to grow earnings in FY 2027, and we are also aspiring to deliver earnings growth ahead of sales growth for the year ahead as well because of all of those other factors that I talked about. But clearly, the level of that operating leverage will be impacted by this very material one-off investment. I'll hand to Mike now. Thank you.
I'll just check with Mike. Mike's actually in Melbourne today on the conference call. Mike, just want to check if you're connected.
Yeah, Rob, can you hear me now?
Yeah, that's great. Thanks, Mike.
Apologies. Michael, thanks for the question. Aleks obviously gave a really extensive answer, and there's not a lot of things there that we would think differently on, particularly from the consumer point of view. I think what we've been very successful at doing over the last 24 months or so is diversifying range, growing in new categories. That continues to give us a strong customer acquisition pipeline, and we're seeing that through the comp growth in some of those core categories. We've been really pleased with that.
I fully agree with Rob and with Aleks comments on the focus on value from the consumer, but I think that's really playing to the capabilities that businesses like Bunnings have and the value proposition we put in front of customers. From that point of view, then looking into the immediate next couple of months, what we can see with festive, with seasonal, and through the spring/summer campaigns, that we're in a really strong position to participate and compete strongly, and I think that will benefit customers, but also benefit Bunnings from a performance point of view.
On operating leverage, we're pleased with the ongoing work that we're doing and continue to demonstrate that through the work that we're doing on productivity. We're less mature than, say, a Kmart business on our global sourcing aspirations, so that's continuing to give us opportunities to deliver great value for customers, but also improve our performance in the margin space. As we look forward over the next 12, 18 months, I'd anticipate the initiatives that we've got underway will continue to deliver operating leverage. But as I've said, probably in every one of these results calls over 10 years, I'm very focused on absolute returns over the long term as well, and we'll keep driving those really hard.
Thank you. The next question comes from Shaun Cousins from UBS. Please go ahead.
Thank you. Another question for Mike around Bunnings, and Mike, thanks for answering my questions over the years, and best of luck to Rachael in the new role. If we think about Bunnings in the past has called out macro drivers such as household disposable income, renovation activity, housing churn, housing value and formation, weather, lifestyle, demographic trends, and technology. Several of these are quite weak at the moment, particularly housing churn and in value following the federal budget.
Can you talk a bit about how these negative factors impact Bunnings' sales growth? I alert to the comment you made earlier around it being a diverse business, but you've got a probably a more challenging macro outlook. What happens to Bunnings' sales as you have less housing churn? It seems to have been a driver in the past, and there's less of it happening now. Thanks.
Yeah, thanks. Great question, Shaun, and I've enjoyed your questions over the years as well, so thank you for those. For us, I think, the point on diversified business is important because we've always sought to have a very resilient business, balancing discretionary and necessity spend. There's a lot of characteristics that are still very favorable in the housing space. You've got a lot more people spending a lot more time working at home, doing things around the home, so we continue to see a lot of active participation.
What's also really pleasing is sort of the attachment rates of the newer categories when customers are shopping in our stores. So coming in for a core mission and then adding on with some of the things in our more consumable sector. So that's performing well. Some markets are performing very strongly. The Western Australian market, the South Australian market continue to perform very strongly on all the indicators we see, and we've probably called out weaker economic performance in some East Coast markets now for a little while.
So we're sort of established in understanding consumer behavior responding to that. I think ultimately, at the end of the day, even though housing churn is down, we still see housing as a long-term asset in our personal portfolio. So we really want to make sure that we invest in that, and that's what we're seeing customers continue to do. We continue to see activity on alterations and additions.
There still is housing churn, obviously, so we're participating in that. So, I think notwithstanding some of the sort of headlines you read about, we're seeing strong participation in our core categories and ongoing attachment to those newer ones. We'll be watching it very carefully. We're working super hard to make sure the offer is strong. But our ability to outperform the market is something we've always been really focused on and will continue to do so.
Fantastic. Thank you. Bye.
Thank you. The next question comes from Adrian Lemme from Citi. Please go ahead.
Hello, everyone, and, yeah, congrats, Mike, on your pending retirement. Always enjoyed our discussions. The Bunnings EBA, I believe, expires at the end of this month and to my knowledge, hasn't been renewed yet. You may not be able to give us a lot of detail, but can you give us a steer at all as to the level of wage growth we should expect in FY 2027? Might it be similar to the fair work decision of 4.75% please?
Yeah, great question, Adrian. We've obviously had a long history of making sure that the way we structure AI really benefits our team, places a permanent base that we've got, and it has for a long time and remains well above Greer. We're well positioned around that. We've got long discussions underway with team and obviously with the SDA as well, and they are coming to a conclusion, which is great. We've got to put that in front of our team pretty soon.
But we don't anticipate anything above Greer. We think we'll be able to strike a really good balance. We model this through the P&L over multi-year periods, so our ability to absorb the increases and offset those with productivity improvements across the business are well established. I think our ability to handle that commercially is very strong. Our ability to reward our team is very strong, and that's something we're really focused on. Yeah, I think that's where we sit at the moment.
Thanks, Mike.
Thank you. The next question comes from Tom Kierath from Barrenjoey. Please go ahead.
Oh, good day, guys. I have one for Aleks. Just on the K Home format. It has been running a couple of months now. Can you maybe just step us through what some of the learnings are? Which categories are doing well? How are you kind of thinking about the rollout potentially? Thank you.
Thanks, Tom. We are really pleased with the early trading results of the first K Home at Box Hill. Some of the things that we have seen in there has been really reinforcing the opportunity we see on furniture and really creating a new market for extreme value price points in our furniture offer. The penetration of that within the Box has been very strong, and we are seeing very strong cross-shop with furniture in a lot of the baskets in the store, which has been really pleasing.
We have seen really strong basket sizes as well, so the transactions have been good, but once customers are in the store, they are really engaging with the breadth of the offer in the store, which has been really exciting to see. And we are seeing really good penetration of our Two Up price points within the store as well. They are some of the very early reads that we are seeing. We clearly have a lot more to do to understand the format and the way that customers trade over the course of a year and really how we optimize our inventory offer in there, particularly for the furniture side of things, which to date has been online only and really surfacing that in-store.
We can see a very strong demand for it. We are going to plan to open a second K Home store in November this year in Queensland in a very different type of catchment. We have not announced it yet, but I think that will be an important second data point in terms of the way that the store trades in a very different type of shopping center to the Box Hill store. I am sure we will get lots of new learnings out of that allow us to optimize the format even further.
Wonderful. Thanks, Aleks.
Thank you. The next question comes from Peter Marks from Goldman Sachs. Please go ahead.
Hey, guys. One just on Bunnings and new categories into FY 2027. Are you able to give us a bit of an update on how you're thinking about applying as we look into FY 2027 that can support that top line growth in Bunnings? Thanks.
Hi, Peter. I really apologize. That didn't come through very clearly. Could I just get you to ask the question again, please?
Yeah, sorry, Mike. Just thinking about how you are thinking about category expansion into FY 2027. Could you give us an update on appliances and anything else, any other categories we should be thinking about for FY 2027 that can support that top line growth in Bunnings?
Yeah, look, great question. Similar to what we talked about at Strategy Day. We have got a number of different growth initiatives growing from the core of the business. So categories like tools and automotive, and pet care. They have all gone through sort of phase II and phase III range expansion and innovation, which are continuing to perform well. We are just expanding our smart home category. We have got our EV charging category, our solar category. We have got [rural] now rolling out to 121 or so stores across the network.
So all of the things we sort of picked out at Strategy Day, we continue to execute on. What is really pleasing us is that they are all resonating with customers really well, and they are all solving different problems and projects around the home. So for us, that is really exciting. And when you start to get into sort of the solar space, that really plays across both consumer and commercial. So that is performing really well as well. I think all will continue to be drivers as we go forward, as will the categories like Marketplace.
You heard Rob talk to that before. We have been blown away with the growth in Marketplace over the last 12 months. That strong double-digit growth has continued into this financial year, so I have been really pleased with that. That has been the take-up both of endemic and non-endemic retail media customers. That one, still very nascent for us, but we think will be a really important earnings driver as the years go by as well. I think foundations are good, the expanded categories are good, and I think that gives us some really positive things to chase as we head out this financial year.
Okay, great. Any update on the appliances category in particular?
On appliances, we've got plans now signed off for the layouts in about 78 or so stores, I think it is. CapEx has been approved for that. We've got a couple of different brands we're working with and looking forward to bringing that into market. Some of those will come in pre-Christmas and then into the second half. If you've been in our stores, you'd have seen some promotional drops of dishwashers, washing machines, and dryers.
They're not brands that customers would necessarily know, but the value in them has been extreme, and the take-up and sell-through has been fantastic. Which really, I think, validates the view that we can drive great volume in this with brands. When you sell the volumes of kitchens that we do across the Bunnings business, driving attachment rates to those makes that a really exciting next category for us.
Thanks, Mike.
Thank you. The next question comes from Craig Woolford from MST Marquee. Please go ahead.
Good morning, Rob and team. Just wanted to ask a question about the cost of goods outlook for the retail businesses. I think there's always a lot of moving parts, and this year is no different. But I'd expect there's currency as a tailwind. How are you managing that combined with the implications on either cost of goods from raw materials or packaging and higher sea freight costs?
Craig, as you rightly said, there are a whole lot of different cost drivers across a very broad mix of products that we sell. I might let Mike kick off with a couple of observations and then go to Aleks and John.
Yeah. Thanks, Rob. I think firstly, the work we're doing in the global sourcing space, which is really targeted at commodity-based entry-level categories, is delivering a couple of things. It's delivering us some lower COGS, which we're obviously able to deliver greater value to customers, but it's also giving us a much better look through the broader supply chain. So, raw materials and those things. So, really helping us understand and in some ways sort of replicate the amazing work that Aleks and her team do at Kmart.
As I've said probably many times over the years, there's a mix of inflation and deflation across the board. We've got such a diversified portfolio from timber to green life to paint. And a lot of those things are grown or manufactured here in Australia, so are immune from some of the global supply chain challenges.
From a COGS point of view, we're not sort of seeing significant inflation on COGS through the P&L. But obviously, we watch very closely what's going on globally, but then work very hard with our supplier partners and sourcing agents to make sure that we're really justifying any increase to cost because we're super mindful that it's challenging for our consumers out there, and we want to just continue to offer compelling value to them. I might hand over to Aleks.
Thanks, Mike. I think as I mentioned in my earlier comments, in terms of input costs across raw materials, it is a net inflationary environment, and clearly the impacts of fuel feed into a lot of those raw materials as well. From a fuel and an ocean freight perspective, it is an inflationary environment. The strengthening of the Australian dollar plays a mitigating impact to all of that. Similar to what Mike said, our sourcing teams work really, really hard with our supplier base to continue to drive productivities through our entire supply chain and look to offset those impacts as much as possible to ensure we can continue to invest in value for our customer base. I will hand to John.
Thanks, Aleks. I think I will break the question up in two. We have a private brand business, and much like Mike and Aleks, we have been working through and a lot of the cost of goods sold, we have been able to negate through scale, through the partnership with Anko, and through the reset of our merchandise strategy. If I just take a moment and talk a little bit about chips and memory. We have seen an increase in chips and memory, but the increase started last November, December, and our teams have been working with suppliers since that point in time to try to mitigate those cost increases.
We have been able to secure, I think, better than market increase products for our customers as a result of the planning that we have been able to work with our suppliers. That is kind of negated, I think, where the market has increased their prices. We do have other areas where prices have kind of flowed straight through to our cost of goods sold and working through that with our suppliers.
Thanks. Just one for Aleks, if I can. You said that it was a net inflationary environment. Is that even after the currency and maybe the, I guess the implication there is that there are still hedges that need to roll off. Is that how I should think about it?
Yeah, I think we've talked about our hedging policy in the past. So we hedge 12- 18 months in advance. The spot rate impacts that you see don't flow through immediately. It's quite a progressive impact on the P&L, which is really important for us because it means we can plan our business well in advance. My point on the net inflationary is more in terms of raw material input costs across all of the different imports. You've got your ups and downs, but overall, raw materials are in an inflationary cycle. But equally, we work really hard on productivity with our supplier base to try and offset as much of that as possible.
Thanks, Aleks.
Thank you. The next question comes from Bryan Raymond from JPMorgan. Please go ahead.
Good morning, over in W.A. Just another one for Aleks on K Home, actually. Just want to extend on the prior question there. Just be interested to see what you're looking for out of these trials, how many trial stores you might need to do before you can really push go on a broader rollout, whether it's dependent on the DC being fully up and running before you can do that, if the furniture category is dependent there. And also just how you see the opportunity in terms of space in those large format or standalone centers which you can look to roll that format out in.
Yeah, thanks, Bryan. In terms of what we're looking to prove out, it really is the economics of the format. Sales density is a really key measure that we would look at, and we would want to really satisfy ourselves that we can generate really good sales density out of this format. Because if we can do that, the economic equation clearly becomes a lot easier for the rest of the store. Outside of that, clearly, we've got a lot to learn in terms of how we resource it, how we flow stock through to the store, and there'll be a whole lot of operational things that we need to learn from.
But sales density would be the key metric that we focus on from an economic perspective. The second one really is how does the format perform in different catchment types? I mentioned the second store that we're going to do is in a very different type of shopping center to Box Hill. Again, given it's a brand-new format with no trading history, really understanding the transaction frequency, the basket size of customers, and how all of that plays out across different catchments is going to be important for us.
On the supply chain perspective, we've solved for that through our existing facilities in Victoria. So it's not currently a constraint in terms of being able to roll out more stores over time. Clearly, depending on the materiality and the number of stores in different states, we would need to look at supply chain solutions. But supply chain at the moment isn't a constraint to doing more trial stores. How many would we want?
I think realistically, a handful of stores in different demographics and different catchment types would allow us to get confidence that the results can be replicated more broadly. We're having really constructive conversations already with lots of landlords around opportunities nationally. So I'm confident that if we can prove out the economics and we can get good commercials in terms of available space, that there is a rollout opportunity, when we're ready to press the button on that.
Okay. Excellent. Thank you.
Thank you. The next question comes from Caleb Wheatley from Macquarie. Please go ahead.
Hi, Rob, Anthony, and team. I was just interested if you could provide a bit more detail in, I do not know, the quote-unquote, non-retail income streams. I guess I was particularly focused on Hammer Media. I appreciate it is still quite early, but it has been sort of up and running for maybe a year or so now. Even your comments on Marketplace, and the growth that is coming through there. In a kind of broader sense across the business, what is the sort of materiality of those sort of non-traditional income streams, and how are you thinking about sort of the opportunity for that to become more meaningful in a group sense?
Well, Caleb, Rob here. I am assuming you are meaning the non-retail businesses within the retail divisions, because clearly we have. When you actually look at some of the higher growth rates of earnings were delivered in WesCEF and Health division this year, and we would expect that to continue. Going back to the point that you mentioned, we are still at the very early stages of our journey in terms of retail media and marketplace. We did call out that we have seen very significant growth in both, albeit off a low base. On the media side, I might let Mike make a few comments because Bunnings has made some amazing progress.
It is also worth noting that we have also seen really pleasing progress with retail media in Officeworks, in the Health division, and also through some of the non-endemic partnerships that we have entered into through OneReach, which Leah Balter is overseeing. I will let Mike talk to that. On the marketplace side, if you look collectively at the Bunnings and Kmart Marketplace, we grew marketplace sales by over 70% this year. Importantly, those sales are profitable sales for the group. Actually, the more we grow the marketplace, not only are we better leveraging the amazing traffic that we have across the group, the digital traffic we have across businesses like Kmart and Bunnings.
We are also creating additional opportunities for businesses like Target and Officeworks that are participating on those marketplace platforms. And then it is creating this flywheel effect because then the opportunities around retail media are accelerated through that as well. We are very excited about continuing to expand the marketplace sales. I will hand over to Mike just to give a bit of context on some of the retail media strategy and growth.
Yeah. Thanks, Rob, and thanks, Caleb. I just want to add a couple of points, too, on Marketplace. It continues to grow really well for us. It grew about 30% in the last financial year, and that sort of growth continued into the new financial year. We are now at about 310,000 SKUs and 616 partners that we are working with. Just to sort of remind everyone, this is a curated marketplace that focuses on things for the home.
That is now turning up in about 25% of all online shopping baskets. Our customers really get it. It is deeply integrated into our digital ecosystem and performing really, really well. I think that is something that will continue to drive and grow in the years ahead, launching it in New Zealand next month. As Rob touched on earlier, we have got services and commercial marketplaces running, so really pleased with that. On retail media, I think Bunnings is uniquely positioned to really drive growth here because of its branded strategy. We are a house of brands.
We have had fantastic participation from our endemic suppliers, so our existing supplier base. Also really strong interest, which we are working in partnership with Leah and her team at OneReach on around non-endemic and brands that want to participate. Brands like Toyota and American Express, even promoting things like federal elections and things like that. We have been able to really participate in lots of different ways. We have got close to 600 screens across our store fleet and continue to grow that. Our [Tradeo] retail media radio station is performing very, very well. It is outperforming expectations on ratings. I think incredibly well equipped to grow that.
As you noted, Caleb, it has only really been running for 12 or so months. Not material to earnings at this point in time, but really excited to see where this goes. I think really demonstrates, as a group, what Wesfarmers can really do in this space just because of the retail brands we have, the connection to suppliers, but also the incredible customer data that we can use to generate real engagement and personalization for the customer, but real value for endemic and non-endemic suppliers as well.
Yep, that is precisely what I was after. Thank you, Rob and Mike. All the best for the future, Mike.
Thank you.
Thank you. The next question comes from Benjamin Gilbert from Jarden. Please go ahead.
Hi, Rob and team. Rob, I was just hoping you could help me around the outlook for WesCEF. There's obviously a lot of puts and takes that's sitting within there. It feels like you're potentially seeing more headwinds than not in the WesCEF business, ex lithium for FY 2027. When we put it all together, do you think there's still scope to grow given some of these cost impulse?
Second part, sorry, two parts to this. It's just on the lithium side, you've obviously still got the odor issues and these sorts of things. You're obviously going to have half of that contracted out for the spod. Are you still expecting quite a material uplift, obviously, given some of the pricing tailwinds netted against some of these odor issues, et c, running through the plant?
Ben, I'll let Aaron talk to it in more detail. We certainly weren't trying to convey a negative outlook. In fact, as Aaron will talk to, there's actually quite a number of benefits that should flow through as a result of recent capacity expansions, some recontracting benefits, et c. I know that we do, just because obviously the business is always subject to global commodity price changes, weather impacts, et c, we always include those risk factors in all of our commentary around outlook. I'll hand over to Aaron to talk to the specifics.
Yep. Hi, Ben. Just starting with the WesCEF core portfolio, then we'll touch on lithium. I think it's a positive outlook for us for FY 2027 across a few factors. The first is we've published what I think is a helpful chart in the WesCEF section showing the impact of the ammonia curve. Obviously, as ammonia prices are retracing and normalizing after the Middle East situation, we're going to get that benefit in FY 2027. We're already seeing that in the first quarter of this financial year, that will start to drop into the earnings. We've been on a long program the last few years on capacity expansion.
We are well down the path on the sodium cyanide expansion, where we're lifting production by about 30,000 tons. That will be complete at Christmas this year. Then you're going to get a full 12-month benefit in FY 2028, but you'll start to see the earnings uplift in FY 2027 from that. There's also been an increase in the ammonium nitrate margins. That's been something that the wider industry's been talking about for a few years as the supply-demand imbalance has normalized.
There's been really strong iron ore production growth up in the Pilbara, and we have benefited from recontracting with some of our key customers. We tend to do that on three to five-year cycles. We've just renewed a material contract that'll start benefiting in FY 2027. Really on that core chemicals portfolio within WesCEF, FY 2027 is really a year where we start to harvest a lot of the benefits of capacity expansions and work that's been underway for the last few years.
I see that as a positive story. Over on lithium, as you said, we have flagged here that we expect to sell at least half of the nameplate production from Mt Holland. That is good margin business at the moment. Obviously, you saw a profitable FY 2026, but that is going to step up in FY 2027 for lithium because Mt Holland is running at nameplate capacity.
You are getting a good cost position as a result of that at unit costs. I am not going to call lithium prices, but we have already made some sales, material sales for the FY 2027 year in spodumene and attracting the current spot prices. You are making good money on those tons. The second half of FY 2027 will really be around the pace of the hydroxide refinery ramp-up. If that is slower than expected, we obviously have the benefit that we can offset that by selling more spodumene at profit.
That is really helpful. The other issues, that is just going to be the other half just in terms of the ramp-up, right? So if there is more delays around the 80, you can just put more into spot at spot. Is that what you are saying?
Yeah, that is, I suppose, the benefit of a vertically integrated operation. We have that flexibility embedded in the business model that we can quickly allocate any spare spodumene tons, at good profitable margins at the moment, into the spot market.
That is really helpful. Thanks, guys. Appreciate it.
Thank you. The next question comes from Richard Barwick from CLSA. Please go ahead.
Oh, hi all. Got another question for Aleks on Kmart. Can you just clarify the Plan C stores, Aleks? 20 converted in FY 2026. Are you planning on adding 20 more? Is it 40 more into 2027?
Richard, we are planning up to another 20 this financial year. So we have already launched-
Right.
...some incremental ones. In the second half, we will look at the rollout profile as we scale the format and as we optimize based on the learnings of having an expanded number of stores across the fleet.
That sort of conversion, Aleks, is it disruptive? Should we be thinking about the conversions, at least in FY 2027, as a drag on earnings? Or are they actually additive?
No. Look, the objective through the refurb program is to try to minimize the disruption as much as possible. I would not be calling any material dilution to sales or profit as a result of the conversion program.
Okay. Just to a second one. You have said that you will not give us a number for the drag from bringing in the new fulfillment center. Can you clarify, is the impact going to be contained to FY 2027, or is this going to flow in terms of dual running costs and stuff into FY 2028 as well?
Yeah. The biggest impact is this financial year because, we take the facility on in October and then commence our part of the fit-out, which means we are paying rent on a facility where we have zero benefit, while at the same time, a lot of the technology investment hits the OpEx line. As we get into FY 2028, it will be a progressive transition from the old facility into the new one, and it will be a progressive benefit realization as well. So it is really this year where we have the material cost impact with no benefit attached to it.
Yeah. Okay. All right. Thanks, Aleks.
Thanks.
Thank you. The next question is from Phil Kimber from E&P Capital. Please go ahead.
Guys, I was just going to follow on from Ben's question around lithium. Just in particular how the ramp-up of hydroxide works. While that is in ramp-up, are you actually reporting sales at just basically no margin for that business as customers are testing the product? Or do you actually report sales, but they are basically offset by costs during ramp-up while that occurs? Just trying to understand initially how long does it take? When it is at a decent run rate and starts becoming profitable, at that point it starts being recorded in the P&L or is it capitalized? I was not sure how it worked through that ramp-up period. Thanks.
Okay. Thanks, Phil. There are a few elements into that question. I might just touch on the qualification process and how we sell those tons first and then come to the capitalization piece, and hopefully, that gets you there. The first part, when you are selling lithium hydroxide, which is obviously very different to the spodumene market, there is an open spot price. We can sell that at good profits, as I mentioned to Ben. On hydroxide, we are going through the qualification process. But in the meantime, we have sold lithium hydroxide at very close to the index price.
But because you are unqualified, there is a small discount versus the headline index price. But at the moment, that has not been an issue. It is good quality product. There are plenty of battery makers and Chinese buyers that will buy that off that spot reference price. Ultimately, once we complete the customer qualification process that we have spoken about before and you start hitting your commercial quantities, we will be then selling under our commercial agreement, which once again will follow the reference prices with other mechanisms in there.
At the moment, the refinery costs on a unit cost of production are being capitalized under the standards until you hit effectively a commercial scale of production. Then those unit costs are capitalized. The way it basically works is you have a long-run estimate of what your future mature cost position should be per ton. Any cost above that during the capitalization phase is taken to the balance sheet. So we will need to make a decision during the ramp-up profile when we move from capitalization phase to expensing it.
Yeah. Once that decision is made, is there like a catch-up on the bit that was capitalized? Do you have to amortize that in one hit, or does that sort of just stay on the balance sheet?
No. That will stay on the balance sheet, and then be effectively depreciated over the life of the asset. But it is relatively small in the scheme of the initial construction CapEx.
Yeah. Perfect. Thank you.
Thank you. The next question comes from Michael Simotas from Jefferies. Please go ahead.
Oh, thank you for taking another question. Just wanted to follow up on the commentary around Kmart seasonal sales being a little bit weak in the fourth quarter, and specifically whether the inventory associated with those categories is still being held or whether you have managed to work through it.
Thanks, Michael. As I mentioned earlier, I think we managed inventory really well throughout last financial year and really closed June with a really healthy inventory position. So, we go through our normal markdown and clearance processes at the end of a season, which we have been doing, and the impacts would be well within kind of normal levels. So there's no abnormal clearance levels to speak of that you should be concerned about hitting the first half profit numbers.
Perfect. Thank you.
Thank you. The next question is from Adrian Lemme from Citi. Please go ahead.
Thanks for a quick follow-up. Mike, I saw the lease extension on 62 properties with the BWP Trust was announced earlier this month. I was just curious in the context of the strong growth we've seen in industrial rents in recent years, where did rents land relative to the rest of the portfolio, please?
Relative to the rest of the portfolio, broadly in line. I think our property team have got incredible experience at working through these, and obviously we've got fantastic long-term relationships with our landlords as well. Yeah, there was nothing in that that caused us any indigestion. They're long-term leases with lots of options. Yeah, very comfortable. Anthony might have something else to add, but that would really be all from me.
No, I think that's right, Mike. That was really about extending the initial term of those leases and making sure we've secured those for the longer term, and very much under what we'd probably call standard Bunnings lease terms. Yeah, nothing really to call out in terms of costs.
Thanks very much.
Thank you. The next question comes from Peter Marks from Goldman Sachs. Please go ahead.
Oh, hi, guys. Just one for Anthony, a bit of a housekeeping one on tax rates and net interest. Maybe with net interest first, like stepped up to AUD 264 million in the second half. Appreciate it's going up in 2027. Yeah, talk us through the magnitude of that, or any more help on that would be helpful. Then tax rate, second half was a bit lower than what I was expecting. Just wondering how you're thinking about that into FY 2027. Thanks, Anthony.
Yeah. Thanks, Peter, for the question. A couple of things there. On interest rates, we have tried to give a bit of guidance because clearly there has been. We have benefited from certainly low interest rates, and if you look at the balance of the average rate and the average cash rate through the year, we benefited more from the interest rate reductions than obviously the subsequent interest rate increases were later in the year. You combine that with the fact that you then got an extra AUD 1.7 billion. We paid out the capital management initiative AUD 1.7 billion.
So our base level of debt is higher. You combine that with a CapEx program that we have got, and that is why we have tried to just give you some guidance around the fact that borrowing costs will be higher. There is no fundamental issue with that, and we are still benefiting from the fact that we have about AUD 3 billion of bond debt that is sitting on a fixed rate of about just above 3%.
So we are still going to benefit from that, but we have obviously going to have more debt that is on variable terms, that will be subject to interest rate increases which we have seen occur through the financial year. So there is nothing sort of outside of that. I think we are just calling that out to make sure that you better understand how that is likely to flow through. Sorry, I have forgotten your second question.
Oh, just the tax rate.
Oh, tax. Yeah. So during the year, we did have a bit of a tax benefit because we had some tax losses that we were able to utilize to offset some of the capital gains we will have got from the BPI property sales. So you will have seen our effective tax rate this year was a little bit lower. Not massively, but a little bit lower than we would typically have, and that really came as a result of tax losses that we were able to utilize to offset capital gains on the BPI property sales. That should normalize into 2027. We do have some further BPI property sales planned for FY 2027, but they will be a lot smaller, so less of an impact.
Very helpful. Thank you.
Thank you. The next question comes from Bryan Raymond from JPMorgan. Please go ahead.
Thanks for taking the follow-up. I know it has been a lot of discussion on the consumer already, but I just want to be really clear around post-budget performance in Bunnings. Have we actually not seen any impact in. Have you seen an impact at all in Bunnings in terms of activity around some of those more renovation-linked categories, let us say, as we have seen all the data coming out around activity in new listings and in terms of borrowing and so on is down certainly into double digits. I would just be interested if there has been any flow on effect that you have seen to date. Thanks.
Thanks, Bryan. Great question. Yeah, couple of reflections. One, notwithstanding some of the reporting that is occurring around housing and lending and those sorts of things. The data that we see still strongly points to very strong levels of equity in owner-occupied properties and things like that, which gives us confidence that there is still plenty of activity being done in the alterations, additions, repairs, and renovations space.
To be a little bit more specific to your question, we have not seen anything noticeable post-budget. Obviously, seasonally, the winter months can be a little bit quieter because of weather for projects getting started on site. Or even projects being done in and around the home. Cold, wet weather can make it hard for painting and things like that. But certainly have not seen anything that is giving us any cause for concern.
As I said before, I think some of those fundamentals around people working at home more, spending more time around the home, and even not spending some discretionary money on going out and entertaining and doing more things at home, all are things that we benefit from. So yeah, I think we're, as I said before, comfortable with where we're at at the moment, and I think we've sort of got the mix, the assortment, and the value proposition right to perform better than how the market performs, which is how we've always thought about this over the long term.
Okay. That's comforting to hear. Thanks, Mike, and thanks for answering all my questions over the years, and best of luck.
No, thanks so much, Bryan, really appreciate it.
Thank you. At this time, there are no further questions.
Thank you. Well, thank you everyone for that. If any further questions, please give Michelle and the team a call. Thanks a lot.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.