Reece Warns of Margin Pressure as US Competition and Housing Softness Bite
Reece Limited projects FY25 EBIT between A$548m and A$558m, citing ongoing softness in housing markets across Australia, New Zealand, and the US, alongside rising competition in its key US residential construction segment.
- FY25 EBIT guidance set at A$548m–A$558m, reflecting subdued volumes
- Housing market softness persists in Australia, New Zealand, and US sunbelt
- US residential new construction slowdown and increased competition weigh on margins
- Recent interest rate cuts yet to stimulate housing activity
- FY25 results scheduled for release on 25 August 2025 with investor webcast
Challenging Market Backdrop
Reece Limited, a leading distributor of plumbing and HVAC-R products, has issued a trading update for the full fiscal year 2025, confirming a tough operating environment marked by persistent softness in housing markets across its key regions. The company expects its underlying earnings before interest and tax (EBIT) to land between A$548 million and A$558 million, a range that underscores the pressure on volumes and margins.
Chairman and CEO Peter Wilson highlighted that the second half of FY25 failed to show any meaningful improvement despite recent interest rate cuts in Australia and New Zealand. “Volume settings remain soft, and recent interest rate cuts have not yet translated to improved housing activity. This will take time to flow through,” he said, pointing to the lagging impact of monetary policy adjustments on the housing sector.
US Market Headwinds Intensify
In the United States, Reece’s exposure to the residential new construction (RNC) sector continues to be a significant drag. The company noted that housing units under construction are down year on year, especially in the sunbelt region where it operates. High mortgage rates and ongoing affordability challenges have dampened demand, while new market entrants have intensified competition, further squeezing profitability.
Wilson acknowledged the cyclical nature of these challenges but expressed confidence in Reece’s long-term strategy. “We have seen similar cycles before and remain confident in our long term approach,” he said, signaling resilience despite near-term pressures.
Looking Ahead
Investors will be watching closely when Reece releases its audited FY25 financial results on 25 August 2025. The company has scheduled a webcast briefing for analysts and investors to provide further insights into its performance and outlook. Given the current macroeconomic headwinds and sector-specific challenges, the market will be keen to understand how Reece plans to navigate the ongoing housing market softness and competitive pressures, particularly in the US.
Bottom Line?
Reece’s FY25 update signals resilience amid a housing market slump, but the path to recovery remains uncertain.
Questions in the middle?
- How quickly will recent interest rate cuts translate into improved housing demand?
- What strategies will Reece deploy to counter increased competition in the US market?
- Could prolonged softness in residential construction force a strategic pivot?
