IPD Group Forecasts 7.6% EBITDA Drop Amid 25% Data Centre Revenue Surge
IPD Group Limited forecasts a modest decline in earnings for FY25, even as revenue grows across key segments and cash flow remains robust.
- FY25 EBITDA and EBIT expected to fall around 7.6% and 9.1% respectively versus FY24 pro forma
- Revenue growth forecasted in core IPD business, EX Engineering, and CMI’s Minto Plugs
- Data Centre revenues surge 25% year-on-year
- Order backlog remains elevated at $91.5 million
- Company to repay an additional $10 million of core debt in FY25
Earnings Guidance Highlights
IPD Group Limited (ASX: IPG) has released its earnings guidance for the financial year ending June 30, 2025, projecting a slight decline in profitability despite continued revenue growth. Based on unaudited results through April 2025 and management forecasts for the final two months, the company expects EBITDA to range between $45.7 million and $46.3 million, representing a roughly 7.6% decrease compared to the FY24 pro forma figure of $49.8 million. EBIT is similarly forecasted to decline by about 9.1% to a range of $38.6 million to $39.2 million.
Revenue Growth Amid Market Headwinds
Despite the earnings dip, IPD anticipates revenue growth across several core segments. The core IPD business is expected to grow revenue by approximately 4.9%, while EX Engineering and CMI’s Minto Plugs are forecasted to increase by 4.6% and 5.2%, respectively, on a pro forma basis. Notably, Data Centre revenues have surged by 25%, underscoring the company’s strategic focus on this expanding market. However, challenges persist in CMI’s Cables segment, which faces a 7.6% revenue decline due to headwinds in the commercial construction sector, and Addelec, which is experiencing a 12.6% revenue drop linked to project delays.
Margin Pressure and Operational Efficiency
IPD acknowledges downward pressure on gross profit margins as its order book shifts from daily trade to larger, more complex, and competitive contracts. Nevertheless, the company highlights improved operating expense ratios relative to revenue, attributing this to successful cost base adjustments and operational investments. This efficiency positions IPD well to support future growth despite margin challenges.
Strong Cash Flow and Debt Reduction
Cash flow conversion before interest and tax is expected to remain above 100%, a sign of robust operational cash generation. Reflecting confidence in its financial position, the Board has approved an additional $10 million repayment of core debt during FY25, moving the Group into a net cash position. CEO Michael Sainsbury expressed optimism about the company’s evolution and value proposition improvements, emphasizing long-term structural tailwinds that support ongoing growth despite short-term market difficulties.
Looking Ahead
IPD plans to provide further details at its full year results announcement in August 2025. Investors will be watching closely to see how the company navigates margin pressures and market headwinds while capitalizing on growth opportunities in data centres and other segments.
Bottom Line?
IPD’s FY25 outlook balances cautious earnings declines with promising revenue growth and strong cash flow, setting the stage for a pivotal full year update.
Questions in the middle?
- How will margin pressures evolve as IPD pursues larger, complex contracts?
- Can growth in data centre revenues offset challenges in commercial construction segments?
- What impact will the additional $10 million debt repayment have on future investment capacity?
