GWA Group (GWA) H2 2024 earnings summary

Executive summary

• Delivered solid FY24 results with disciplined execution, achieving group volume growth of 2.1% and volume gains in Australia (up 3.8%) and the UK (up 4.3%), offset by a significant downturn in New Zealand.

• Normalised EBIT and EBIT margin improved year-over-year, with a 15% increase in the full-year dividend to 15.0 cents per share, fully franked.

• Maintained strong cash generation and lowest net debt in five years, supporting enhanced shareholder returns.

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

Financial highlights

• Group revenue rose 0.4% to $413.5m year-over-year; Australia up 1.8%, UK up 8.6%, NZ down 16.5%.

• Normalised EBIT increased 5.4% to $74.2m; normalised EBIT margin at 17.9%.

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

• Cash conversion ratio at 110%, with operating cash flow up and capital expenditure at $3.0m.

• Final dividend of 8.0c per share (up 14%), full-year dividend 15.0c (up 15%), payout ratio 87%.

• Net debt at $97.0m, 17% lower year-over-year, lowest in five years.

Outlook and guidance

• FY25 outlook is mixed: Australian market faces headwinds, with solid demand in health/aged care, residential detached expected to contract, multi-residential to increase, and commercial new office builds to decline.

• New Zealand market remains challenging; business realigned to respond.

• UK: Modest recovery expected in FY25, with benefits from new customer wins.

• 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.