Reece (REH) H1 2025 earnings summary

Executive summary

• Group sales/revenue declined 3% to AUD 4.4 billion (or $4,402 million) 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 fell 19% to AUD 181 million.

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

• Ongoing investment in network expansion, digital innovation, and two bolt-on acquisitions in ANZ.

• Interim dividend declared at 6.5 cents per share, fully franked.

Financial highlights

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

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

• Net debt increased to AUD 646 million, with net leverage ratio up to 0.8x from 0.6x at FY24.

• EPS declined 19% to 28 cents; dividend payout for the half-year was $115 million.

• Operating cash flow was $256 million, down from $378 million in the prior year.

Outlook and guidance

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

• Interest rate and affordability challenges remain, especially in the US; management remains focused on long-term growth and resilience.

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