The long-term credit rating of diversified conglomerate Wesfarmers has been upgraded to positive on an improved operating performance, future-focused approach and sound capital management.

Ratings agency S&P upgraded Wesfarmers from stable to positive in its latest report, stating the company could see its A-2 rating upgraded to A- in the next two years.

“The outlook factors in our expectation for some moderation in retail sales in the near term,” Standard & Poor’s credit analyst Paul Draffin said. “While improving coal prices may provide a significant boost to group earnings in the next two years, this is not a key driver of the upside rating potential.”

The upgrade follows a flat earnings period for Wesfarmers – whose insurance division includes Lumley Insurance, WFI and OAMPS Insurance Brokers – despite incremental increases in written premiums and a quiet claims period.

Revenue across the insurance division was stagnant at $868 million, with earnings before interest, tax and amortisation falling across underwriting and broking reporting lines. At the group level, Wesfarmers posted a 0.9% increase in net profit to $879 million.

S&P says any proposed upgrade to A- hinged on operational and profitability improvements in Coles and improvement in the group’s financial profile.