Waterco (WAT) H1 2025 earnings summary

Executive summary

• Sales revenue increased 14% year-over-year to $132.4m for HY25, driven by diversified revenue streams and the Davey acquisition, despite challenging conditions.

• Net profit after tax declined 15% to $5.9m, with underlying NPAT down 11% to $6.6m, impacted by margin compression, cost pressures, and FX losses.

• Interim fully franked dividend of 7 cents per share declared, payable 2 May 2025, consistent with the prior year.

• Strong regional sales growth across ANZ, North America & Europe, and Asia, with ANZ benefiting from the Davey acquisition and robust pool division.

• Ongoing investment in manufacturing, R&D, and sustainability initiatives to support long-term growth.

Financial highlights

• Operating revenue increased 13% to $134.7m; sales revenue at $132.4m, up 14% year-over-year.

• Underlying EBITDA declined 4% to $16.6m; underlying EBIT fell 14% to $10.7m; statutory EBIT down 17% to $9.8m.

• Net profit after tax (NPAT) was $5.9m, down 15% year-over-year; underlying NPAT was $6.6m, down 11%.

• Net cash from operating activities dropped to $1.3m from $15.5m in HY24, mainly due to higher working capital.

• Working capital increased to $113.0m, with inventory at $102.2m, reflecting higher sales and investment in raw materials.

Outlook and guidance

• Stronger second-half performance expected, supported by seasonal demand, improved margins, and cost-reduction initiatives.

• Plans to expand manufacturing capacity in Malaysia to support U.S. and European growth.

• Additional synergies and operational efficiencies anticipated from Davey integration and facility consolidation.

• Board expects AUD to stabilise; FX hedging strategies under evaluation.

• Focus on product innovation, expanded distribution, and strategic M&A to accelerate growth.