Big River Industries reported a significant $17 million loss for the half-year ending December 2024, driven by a $20 million non-cash impairment charge and a 3.3% revenue decline. The company also announced a reduced fully franked interim dividend of 2 cents per share.
- Half-year loss of $16.997 million versus prior profit of $7.12 million
- Revenue declined 3.3% to $211.5 million amid challenging market conditions
- Non-cash impairment charge of $20 million on intangible assets
- EBITDA before significant items fell to $14.8 million from $20 million
- Interim dividend cut to 2 cents per share, fully franked
Financial Overview
Big River Industries Limited has reported a stark reversal in profitability for the half-year ended 31 December 2024, posting a net loss after tax of $16.997 million compared to a $7.12 million profit in the same period last year. Revenues from ordinary activities declined by 3.3% to $211.5 million, reflecting ongoing pressures in the building supplies and manufacturing sectors.
The company’s EBITDA before significant items dropped to $14.8 million from $20 million in the prior corresponding period, signaling a contraction in core earnings despite some operational efficiencies and improved pricing discipline. The EBITDA margin stood at 7.0%, down from previous levels but up 17.5% compared to the second half of FY24, suggesting some stabilisation in the market cycle.
Impairment and Asset Write-Downs
A major factor behind the loss was a substantial non-cash impairment charge of $20 million related to intangible assets, including goodwill and customer relationships. This impairment reflects the prolonged downturn in the residential housing sector, which constitutes the largest revenue exposure for Big River. The impairment was split between the Panels division ($8.1 million) and the Construction division ($11.9 million), underscoring the widespread impact across the group’s core operations.
The impairment assessment was based on value-in-use calculations using discounted cash flow models with conservative assumptions, including a pre-tax discount rate of 14.1% and terminal growth of 2.5%. The company noted that any further adverse changes in key assumptions could trigger additional impairments, highlighting the fragility of the current market environment.
Dividend and Capital Management
Despite the loss, Big River declared a fully franked interim dividend of 2 cents per share, a significant reduction from the 8.5 cents paid in the prior year. This move reflects a cautious approach to capital management amid uncertain trading conditions. The dividend reinvestment plan remains in operation, with the last date for election notices set for 5 March 2025.
Net tangible assets per share decreased from 72.74 cents to 64.39 cents, consistent with the impairment and earnings decline. The company’s balance sheet remains supported by $46 million in bank bills and a stable cash position of $18.8 million at period end.
Operational Segments and Outlook
Big River operates two main segments: Panels and Construction. The Panels segment, with nine distribution sites including manufacturing, generated $71.4 million in revenue, while the Construction segment, comprising sixteen sites selling building and formwork products, contributed $140.1 million. Both segments experienced revenue declines, with the Construction division facing the larger impairment charge.
Management highlighted an 8% revenue increase compared to the second half of FY24, suggesting early signs of market stabilisation. However, the company remains cautious, noting the ongoing challenges in the residential sector and the broader economic environment.
Governance and Auditor Review
The half-year financial statements were reviewed by BDO Audit Pty Ltd, with no qualifications or disputes reported. The directors affirmed the company’s ability to meet its debts as they fall due and authorised the release of the report on 17 February 2025. The leadership team, including Managing Director John Lorente and Chair Martin Monro, will be closely watched for strategic responses to the current headwinds.
Bottom Line?
Big River’s significant impairment and profit reversal mark a challenging phase, with market recovery and asset valuations key to watch.
Questions in the middle?
- How will Big River navigate further potential impairments if market conditions worsen?
- What strategies will management deploy to restore profitability and revenue growth?
- Will the reduced dividend policy persist if earnings do not improve in the next half?