GWA Group (GWA) H1 2025 earnings summary

Executive summary

• Achieved 3.4% volume and 1.9% revenue growth in 1H FY25, with strong performance in Australia and the UK, offset by softness in New Zealand.

• Normalised EBIT rose 3.2% year-over-year, supported by cost management and lower depreciation.

• Fully franked interim dividend increased 7.1% to 7.5c per share, payable 7 March 2025.

• Strong cash conversion ratio of 116% and net debt at a five-year low of $92.3m, with leverage at 1.2x.

• Continued strategic focus on 'Customer First' and 'Profitable Volume Growth' initiatives.

Financial highlights

• Revenue was $209.9m, up 1.9% year-over-year, with Australia up 2.4% to $175.8m, UK up 14.5% to $17.9m, and New Zealand down 13.3% to $16.2m.

• Normalised EBIT increased 3.2% to $38.5m, with margin at 18.3%.

• Statutory NPAT was $21.5m, down from $23.2m, impacted by $3.2m in UK ERP and digital project costs.

• Operating cash flow was $53.7m, with free cash flow at $26.2m and capital expenditure at $1.8m.

• Interim dividend of 7.5c per share, fully franked, to be paid March 7, 2025.

Outlook and guidance

• Expect solid demand in health and aged care in Australia, with commercial new build subdued and residential completions to recover from FY26.

• New Zealand recovery anticipated late FY25 into FY26; UK to benefit from new customer wins and modest market recovery.

• FY25 assumptions include ~4% price increase in AU/UK from Feb 2025, D&A $4-6m, interest $6.5-7.5m, FX 60% hedged at US$0.67, and effective tax rate ~29-30%.

• Gradual improvement expected in repair and renovation, though timing is uncertain due to economic conditions.

• Group expects to comply with loan covenants for at least 12 months after the reporting date.