Simonds Group Boosts EBITDA and Eyes Growth with Dennis Family Homes Deal
Simonds Group reported a resilient first half of FY25 with EBITDA growth despite market softness and announced a strategic acquisition to strengthen its market position.
- EBITDA increased to $13.6 million in 1HFY25
- Net profit after tax from continuing operations rose to $2.0 million
- Revenue declined due to softer demand and fewer site starts in Victoria
- Binding agreement signed to acquire Dennis Family Homes
- Strong liquidity position with $32.4 million available
Resilient Financial Performance Amid Market Challenges
Simonds Group Limited (ASX: SIO) has released its financial results for the first half of the 2025 fiscal year, demonstrating a commendable ability to navigate a challenging residential construction market. The company reported an EBITDA of $13.6 million, marking a $1.5 million increase compared to the previous corresponding period. Net profit after tax from continuing operations also improved to $2.0 million, underscoring operational resilience despite a softer revenue base.
Revenue for the half declined to $318.1 million from $337.0 million in 1HFY24, primarily due to subdued demand and delayed residential sales growth in Victoria. The Insurance channel experienced reduced site starts, reflecting broader market headwinds. However, Simonds mitigated volume pressures through higher site start values and improved job margins, alongside disciplined overhead management.
Strategic Acquisition to Expand Market Footprint
A significant highlight of the period was the signing of a binding agreement to acquire 100% of Dennis Family Homes Pty Ltd, announced on 31 January 2025. This acquisition, expected to complete in early March, is positioned to enhance Simonds’ competitive standing and deliver long-term value through synergies and expanded capabilities. CEO David Mckeown emphasized that this move aligns with the Group’s strategy to diversify revenue streams and invest in growth initiatives amid evolving market conditions.
The acquisition complements Simonds’ ongoing efforts to broaden its product offerings, including medium density, affordable housing, and small lot developments. This diversification is critical as the Victorian residential market continues to grapple with affordability challenges and subdued consumer confidence.
Strong Liquidity and Cost Discipline
Simonds maintains a robust liquidity position with $32.4 million available as of 31 December 2024, comprising $7.8 million in cash and $24.6 million in unused banking facilities. This financial flexibility supports the Group’s capacity to invest in strategic initiatives and manage through the current market softness.
The company’s focus on cost efficiency and margin improvement has been pivotal in offsetting the impact of lower volumes. The management’s disciplined approach to overheads and operational alignment is designed to position the business optimally for when market demand recovers.
Outlook and Market Positioning
Looking ahead, Simonds remains cautiously optimistic about the residential construction sector’s long-term prospects. The Group is actively investing in alternative sales channels and expanding its design capabilities to meet evolving customer needs. While no dividend will be declared for the half-year, reflecting prudent capital management, the company’s strategic initiatives and acquisition are expected to underpin future profitability and growth.
As Simonds celebrates 75 years in the industry, the company reflects on its enduring brand strength and trusted partnerships. This milestone reinforces its commitment to delivering value to stakeholders and adapting to the dynamic residential construction landscape.
Bottom Line?
Simonds’ strategic acquisition and disciplined cost management set the stage for growth as market conditions gradually improve.
Questions in the middle?
- How will the integration of Dennis Family Homes impact Simonds’ financial performance in FY25 and beyond?
- What is the timeline for recovery in Victorian residential demand, and how will it affect Simonds’ volume and revenue?
- Which alternative sales channels and product segments will drive the next phase of Simonds’ growth?
