Reece (REH) H1 2025 earnings summary

Executive summary

• Group sales declined 3% to AUD 4.4 billion for the half, reflecting macroeconomic headwinds and housing market softness in both ANZ and the US.

• EBIT dropped 17% to AUD 305 million, and net profit after tax was down 19% to AUD 181 million.

• ANZ sales were flat at AUD 1.98 billion, while US sales fell 5% in USD to $1.6 billion, impacted by challenging market conditions and increased competition.

• Ongoing investment included two bolt-on acquisitions in ANZ and 32 net new branches across the Group.

• The board declared an interim dividend of AUD 0.065 per share, fully franked, down 19% year-over-year.

Financial highlights

• EBITDA decreased 10% to AUD 475 million; EBIT margin and EBITDA margin compressed in both regions.

• Capex to sales ratio rose 38 basis points to 2.9%.

• Net debt increased to AUD 646 million, driven by lower operating cash inflow and higher CapEx and M&A investment.

• Free cash flow was $208 million, down from $341 million in the prior period.

• EPS was 28 cents, down 19% year-over-year.

Outlook and guidance

• Macro headwinds expected to persist in both ANZ and US, with no material change in volume anticipated in the near term.

• Fewer trading days in the second half and timing of holidays will impact sales.

• Interest rate cuts in Australia are positive but further cuts are needed for recovery; US mortgage rates remain elevated despite Fed cuts.

• No material impact anticipated from OECD Pillar Two tax rules for FY25.

• Continued focus on long-term investment and disciplined capital management.