Big River Industries Navigates 1H FY25 Revenue Dip Amid Strategic Reset

Overview of 1H FY25 Performance

Big River Industries Ltd (ASX: BRI) released its half-year results for the six months ending December 2024, revealing a modest revenue decline of 3.3% to $211.5 million. The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) contracted more sharply by 26% to $14.8 million, underscoring the persistent headwinds in the residential construction sector across key markets.

Despite these challenges, Big River’s gross profit margin held steady at 26.4%, supported by disciplined pricing strategies and margin improvement initiatives. Operating expenses increased by 8.2%, reflecting inflationary pressures and investments in restructuring and site consolidations aimed at right-sizing the business.

Division-Level Insights

The company’s two core divisions delivered mixed results. The Construction Products division saw revenue decline 9.2% to $140.1 million, impacted by softer frame and truss volumes as residential markets cooled from historical highs. However, this division managed a 54 basis point gross margin improvement compared to the prior half.

Conversely, the Panels division posted a 10.7% revenue increase to $71.4 million, largely driven by the May 2024 acquisition of SLQ, which has integrated well and contributed to manufacturing synergies alongside the fully operational Grafton plant. This division’s EBITDA margin contracted slightly to 12.3%, reflecting ongoing soft conditions in New Zealand despite recent interest rate cuts.

Financial Position and Capital Management

Big River’s balance sheet remains robust, with net assets of $100.5 million and a gearing ratio rising modestly to 22.8%, influenced by the $20 million non-cash goodwill impairment charge. Cash conversion slowed to 78.4% from 98% in the prior corresponding period, attributed to the unwinding of net working capital after previous strong cash flow performance.

The company declared an interim dividend of 2.0 cents per share, maintaining a payout ratio of approximately 69% of net profit before significant items, signaling confidence in its cash flow generation despite near-term earnings pressure.

Strategic Outlook and Market Context

Looking ahead, Big River anticipates continued subdued conditions in the residential sector, particularly in New South Wales, Victoria, and New Zealand. Queensland, the company’s largest market footprint, is expected to experience stronger growth. The medium-to-long-term outlook remains positive, supported by government housing initiatives, population growth forecasts, and low vacancy rates.

The company is actively pursuing value-accretive acquisitions and operational efficiencies, focusing on growth in differentiated trade market segments. Cost reduction programs, supplier consolidation, and vertical integration efforts are underway to enhance margins and scalability.

CEO John Lorente emphasised the company’s commitment to building for the future through prudent investment in customer-facing initiatives, operational improvements, and business support systems, aiming to position Big River for a rebound in FY26 and beyond.