Babylon’s Revenue Decline Raises Questions Despite Strong Profit Growth
Babylon Pump & Power Limited reported a 22% revenue decline for the half year ending December 31, 2024, yet achieved a 64% surge in profit after tax, driven by operational efficiencies and strategic contract wins.
- Revenue down 22.3% to $17.38 million amid nickel and lithium market weakness
- Profit after tax rises 63.9% to $2.98 million, reflecting improved EBITDA margins
- Maintenance segment EBITDA up 14.9% despite 19.5% revenue drop
- Rental segment revenue falls 29.3% due to sector downturn but demand rebounding
- Refinancing extends debt maturity, improving financial stability
Revenue Pressure Amid Market Headwinds
Babylon Pump & Power Limited (ASX: BPP) has released its half-year results for the six months ending 31 December 2024, revealing a mixed financial performance. The company’s revenue declined by 22.3% to $17.38 million, primarily due to softness in the nickel and lithium markets, which weigh heavily on its rental segment.
Despite the top-line contraction, Babylon managed to significantly improve profitability, with profit after tax soaring 63.9% to $2.98 million. This profit growth was underpinned by operational efficiencies and cost control measures that enhanced EBITDA margins across the business.
Maintenance Segment Drives Margin Expansion
The maintenance division, which accounts for the majority of Babylon’s revenue, saw a 19.5% revenue decline to $12.8 million. However, EBITDA in this segment rose 14.9% to $2.93 million, reflecting improved operational throughput and cost discipline. The company highlighted strong demand for engine rebuild services in both Perth and Mackay, supported by contract extensions such as the recent renewal with Rio Tinto through mid-2027.
These contract wins and operational enhancements position the maintenance segment for anticipated revenue growth in the second half of FY25, signaling a potential rebound after the subdued first half.
Rental Segment Faces Challenges but Eyes Recovery
The rental segment experienced a sharper revenue decline of 29.3% to $4.57 million, with EBITDA falling 23.6% to $1.67 million. This drop was largely attributed to the downturn in nickel and lithium mining activities, which traditionally drive demand for rental equipment.
Nevertheless, Babylon is optimistic about the rental segment’s outlook, citing strong emerging demand in other mineral sectors and the successful introduction of specialty rental products such as hybrid power units and sprayerless evaporators. The company’s Australian distributorship with HIGRA Industrial has also started to generate orders, supporting growth in niche test pumping services.
Balance Sheet and Financing Update
On the balance sheet front, Babylon reported net current liabilities of approximately $4.07 million as at 31 December 2024. However, the company took decisive steps to strengthen its financial position by refinancing $3 million of short-term trade finance facilities into longer-term loans with four-year maturities. This restructuring, completed in February 2025, reclassified $2.25 million of debt from current to non-current liabilities, easing near-term liquidity pressures.
Cash flow from operations remained steady at $2.78 million, closely matching the prior year period, and the company holds $4.4 million in undrawn finance facilities alongside trade receivables from blue-chip clients, providing a solid liquidity buffer.
Strategic Outlook and Market Positioning
Babylon’s management emphasized the company’s focus on operational excellence and strategic growth through potential acquisitions to scale its rental fleet and expand mining services capabilities. The improved EBITDA margins and contract wins in the maintenance segment provide a foundation for growth, while the rental segment’s pivot towards specialty equipment aligns with broader industry trends around emissions reduction and sustainability.
While the company faces ongoing market volatility, particularly in battery metals sectors, its diversified service offering and recent financial restructuring position it to navigate these challenges and capitalize on emerging opportunities.
Bottom Line?
Babylon’s ability to grow profit amid revenue headwinds and extend debt maturities sets the stage for a pivotal second half in FY25.
Questions in the middle?
- Can Babylon sustain margin improvements as revenue recovers in H2 FY25?
- What acquisition targets might Babylon pursue to expand its rental scale?
- How will ongoing commodity market volatility impact Babylon’s rental demand?