SGH Ltd has reaffirmed its FY25 guidance for high single-digit EBIT growth while targeting a net debt to EBITDA ratio of 2.0x by year-end, underpinned by disciplined capital allocation and operational improvements across its diversified industrial, energy, and media businesses.
- FY25 guidance reaffirmed with high single-digit EBIT growth expected
- Targeting deleveraging to 2.0x net debt to EBITDA by FY25 year-end
- Strong operational performance across WesTrac, Boral, and Coates
- Focus on sustainability, innovation, and digital transformation
- Robust market outlook supported by infrastructure and energy demand
SGH’s Strategic Update and Financial Outlook
SGH Ltd (ASX: SGH) delivered a comprehensive investor day presentation on 21 May 2025, outlining its strategic priorities, operational performance, and financial outlook. The diversified industrial group, with leading positions in industrial services, energy, and media, reaffirmed its FY25 guidance for high single-digit EBIT growth. The company also set a clear target to reduce its net debt to EBITDA ratio to 2.0x by the end of the fiscal year, reflecting a disciplined approach to capital management.
CEO Ryan Stokes AO emphasized the company’s commitment to the “SGH Way” operating model, which drives accountability, operational excellence, and sustainable value creation. This model underpins the group’s consistent outperformance, with a decade-long track record of revenue and EBIT compound annual growth rates (CAGRs) of 16% and 19%, respectively.
Operational Highlights Across Core Businesses
WesTrac, SGH’s Caterpillar dealership in Western Australia and NSW/ACT, continues to demonstrate resilience with 8% revenue growth and a 5% increase in EBIT in the first half of FY25. The business is capitalizing on a strong mining and construction equipment demand outlook, supported by a growing installed base that fuels aftermarket services and rebuild opportunities.
Boral, Australia’s largest integrated construction materials company, is advancing its “Good to Great” strategy focused on vertical integration, operational efficiency, and sustainability. The company is investing in upstream quarry reserves and downstream processing upgrades, while driving margin expansion through price realization and cost initiatives.
Coates, the nation’s leading equipment hire business, reported a 4.9% revenue decline in H1 FY25, adjusted for divestments, but improved EBIT margins to 28.2%. Its new five-year Grow30 strategy aims to leverage operational excellence, sales effectiveness, and digital transformation to capture growth in infrastructure, residential construction, and renewables sectors.
Energy and Media Segments: Growth and Transition
SGH’s energy interests, including a ~30% stake in Beach Energy and full ownership of SGH Energy, are positioned to benefit from the energy transition. Beach Energy is progressing key projects such as the Waitsia Gas Plant and Moomba Carbon Capture and Storage, targeting production growth and emissions reduction. SGH Energy’s Crux and Longtom gas fields are advancing development, with first sales gas expected by 2027.
In media, SGH holds a ~40% stake in Seven West Media, which is experiencing record audience growth and is focused on cost discipline and monetization strategies to capitalize on its market-leading position.
Capital Allocation and Sustainability Focus
SGH maintains a disciplined capital allocation framework, balancing growth investments, deleveraging, and shareholder returns. The group targets a leverage ratio below 2.5x, with plans to reach 2.0x by FY25 year-end, supported by strong operating cash flows and portfolio value. Sustainability remains a core pillar, with initiatives across safety improvements, emissions reduction targets, and innovation in automation and digital tools to enhance operational efficiency and customer experience.
Looking ahead, SGH’s management highlighted the robust demand outlook in infrastructure, mining, and energy sectors, supported by a $1.7 trillion seven-year construction investment pipeline and ongoing energy transition dynamics. The company’s integrated operating model and strategic focus on innovation and customer-centric solutions position it well to navigate market cycles and deliver long-term shareholder value.
Bottom Line?
SGH’s reaffirmed growth guidance and deleveraging target underscore confidence in its diversified portfolio and disciplined execution amid evolving market dynamics.
Questions in the middle?
- How will SGH balance growth investments with its deleveraging ambitions beyond FY25?
- What impact will emerging technologies and electrification have on WesTrac’s long-term aftermarket services?
- How will Coates’ Grow30 strategy translate into market share gains amid shifting construction sector dynamics?