SGH FY Net Profit up 32%; Says Will Continue to Pursue M&A

Dow Jones
Aug 11
 
 

Australian industrial conglomerate SGH reported a 32% increase in annual net profit and raised its full-year dividend, supported by a jump in earnings in its construction-materials division.

SGH Tuesday said it made a net profit of 689.2 million Australian dollars (US$486.2 million) for the year through June, up from A$522.9 million a year ago.

Directors declared a final dividend of 32 Australian cents a share, taking SGH's full-year payout to 64 Australian cents a share, up 3% year over year.

SGH said its underlying profit fell by 0.4% to A$920.1 million. Analysts expected an underlying profit of roughly A$948.1 million, according to a consensus estimate collated by Visible Alpha.

"FY26 was a year of disciplined delivery in variable market conditions," Chief Executive Ryan Stokes said. "We grew earnings in line with guidance, expanded margin again, and converted 99% of Ebitda to cash," he said, referring to earnings before interest, taxes, depreciation and amortization.

The company reported underlying earnings before interest and taxes, or Ebit, of A$1.55 billion, up 1% on the year earlier. It had forecast "low- to mid-single-digit Ebit growth" in fiscal 2026.

SGH said its Ebit margin expanded by 40 basis points to 14.7%.

Its Boral construction-products arm reported a 14% jump in Ebit. Growth was broad-based, with earnings up across all regions, SGH said.

In WesTrac, its machinery-distribution business, Ebit rose by 1%. In Coates, its equipment-hire business, Ebit dropped by 7%.

SGH said it expects flat to low-single-digit Ebit growth in fiscal 2027.

SGH has been sharpening its focus on three sectors--mining production, infrastructure and construction, and "transitional" energy--which it expects will have robust market tailwinds and options to both buy and build growth.

Late last year, it offered to buy Australian steelmaker BlueScope Steel alongside U.S.-based Steel Dynamics. Despite sweetening their proposal earlier this year, the pair's takeover attempt has failed to advance.

SGH said Tuesday that it "maintained its discipline on price and value" in its pursuit of BlueScope, which demonstrated the company's capacity to attempt big deals. SGH "will continue to actively pursue other M&A opportunities in FY27," it said.

In June, the company announced plans for a share buyback valued at up to A$500 million, citing a sustained period of strong operating cash flow and reduction in its debt load.

SGH said the buyback will start following Tuesday's results, and will be "funded comfortably within SGH's capital structure and without constraining future capacity to invest in growth."

 
 

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