Reece (REH) H2 2024 earnings summary

Executive summary

• Group sales rose 3% to AUD 9.1 billion, with adjusted EBIT up 2% to AUD 681 million and adjusted NPAT up 3% to AUD 416 million for FY24.

• ANZ sales were flat at AUD 3.8 billion, while U.S. sales grew 3% in USD to $3.5 billion, with mixed demand across end markets.

• Adjusted EPS grew 3% to AUD 0.64; total dividend declared at AUD 0.2575 per share, fully franked.

• Disciplined execution and continued investment in network, innovation, and team development despite challenging market conditions.

Financial highlights

• Adjusted EBITDA up 5% to AUD 1 billion; statutory EBITDA up 7% to AUD 1 billion.

• Group costs (excluding D&A) grew 2.5%, mainly from labor cost increases; including D&A, costs rose 4.1% due to network investment and U.S. rebranding.

• Free cash flow stable at AUD 672 million; strong operating cash inflows of AUD 751 million.

• Net borrowings (including leases) reduced by AUD 378 million; net debt at AUD 518 million, net leverage ratio at 0.6x.

• Effective tax rate was 28.9% (29.4% excluding LIFO adjustment).

Outlook and guidance

• Near-term trading expected to remain challenging in both ANZ and U.S. due to soft housing commencements, approvals, and macro uncertainty.

• Medium- to long-term fundamentals remain positive, supported by housing underbuild, population growth, and infrastructure needs.

• No specific margin or volume guidance provided; management remains cautious and conservative.

• US market outlook remains cautious due to economic uncertainty and lag between lead indicators and activity.