GWA Group (GWA) H2 2024 earnings summary

Executive summary

• Achieved group volume growth of 2.1% in FY24, with Australia up 3.8% and the UK up 4.3%, offset by a decline in New Zealand.

• Normalised EBIT and EBIT margin improved year-over-year, with a 15% increase in full-year dividend, fully franked.

• Maintained strong cash generation and lowest net debt in five years, supporting increased dividends.

• Strategic initiatives such as 'Win the Plumber', 'Customer First', and 'Profitable Volume Growth' drove market share gains and improved customer metrics.

• Proactive inventory and debtor management led to a cash conversion ratio of 110%.

Financial highlights

• Group revenue up 0.4% to $413.5m, with Australia sales up 1.8% and UK revenue up 8.6%; New Zealand declined 16.5%.

• Normalised EBIT up 5.4% to $74.2m, margin rising to 17.9%.

• Statutory EBIT down 6.8% to $64.4m due to significant items; statutory NPAT down 10.4% to $38.6m.

• Significant items totaled $9.7m pre-tax, mainly from NZ restructuring and digital investments.

• Final dividend of 8.0c per share (up 14%), full-year dividend up 15%, payout ratio 87%.

• Net debt at $97.0m, lowest in five years; leverage ratio at 1.2x.

Outlook and guidance

• FY25 outlook: mixed Australian market, solid demand in health/aged care, challenging NZ market, modest UK recovery.

• Australian residential detached expected to contract, multi-residential to increase due to housing shortage, but timing uncertain.

• Commercial new office builds to decline, offset by refurbishments and healthcare.

• Price increase of ~4% implemented in Australia from Feb 2024; effective tax rate expected at 29-30%.

• Capex planned at $4-6m; significant items of $5-6m for UK ERP and digital initiatives.

• Cash conversion expected to normalize to 90%-100% range.