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Own Wesfarmers (ASX:WES) shares? Then you’re invested in lithium

Let’s take a closer look.
The post Own Wesfarmers (ASX:WES) shares? Then you’re invested in lithium appeared first on The Motley Fool Australia. –

The Wesfarmers Ltd (ASX: WES) share price has been on fire in 2021.

Shares in the conglomerate have been in hot demand with a spate of COVID-19 lockdowns fuelling consumer demand.

Wesfarmers operates household banners such as Bunnings, K-Mart, Officeworks and Target.

However, not many investors know that the conglomerate also has significant exposure to the lithium sector.

Let’s take a look at Wesfarmers’ involvement in the lithium sector.

Wesfarmers enters lithium sector

The lithium sector has received extra attention recently as spot prices soar.

One of the many companies that could benefit from higher lithium prices could be Wesfarmers.

Earlier this year, the conglomerate divested its coal business and expanded into the burgeoning lithium sector.

This move culminated in Wesfarmers constructing a lithium mine in the Western Australian region of Mt Holland.

The conglomerate also has a joint venture company, Covalent Lithium, with Chilean lithium giant Sociedad Química y Minera de Chile (SQM).

Following a feasibility study, the Mt Holland project has an approximate annual production capacity of 50,000 tonnes of battery-grade lithium.

Most recently, Wesfarmers received ministerial approval for the construction and operation of the lithium hydroxide refinery as part of its Mt Holland lithium project.

As a result, the conglomerate is in a unique position to supply battery-grade lithium to sate global demand.

Snapshot of the Wesfarmers share price

Up until recently, the Wesfarmers share price was having a stellar year thus far.

However, in the past 3 weeks, shares in the conglomerate have fallen more than 14% from their record highs.

The sell-off coincides with the release of the company’s full-year report for FY21.

For the full-year, Wesfarmers recorded a 10% increase in revenue and an 18.8% jump in EBIT from continuing operations.

Other highlights from the company’s full-year report included;

EBIT (after interest on lease liabilities) up 20.7% to $3,550 million
Net profit after tax rose 16.2% to $2,421 million
Operating cash flows down 25.6% to $3,383 million
Fully franked full year dividend of 178 cents per share, up 17.1% year on year
Proposed $2.3 billion or $2.00 per share capital return to shareholders

Despite falling in the past month, the Wesfarmers share price remains more than 12% higher for the year.

Shares in the conglomerate closed yesterday’s session at $28.85.

The post Own Wesfarmers (ASX:WES) shares? Then you’re invested in lithium appeared first on The Motley Fool Australia.

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More reading

Woolworths (ASX:WOW) share price on watch after its big green promise
How does the Wesfarmers (ASX:WES) dividend compare to its sector?
Broker gives its verdict on the Wesfarmers (ASX:WES) share price
Wesfarmers (ASX:WES) share price in focus as Bunnings and Officeworks reopen Sydney stores
Top brokers name 3 ASX shares to sell next week

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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