GWA Posts 2.8% EBIT Growth with $30m Buyback Plan
GWA Group Limited reported modest revenue and earnings growth for FY2025, underpinned by strong Australian and UK markets, while announcing a $30 million on-market share buyback starting September 2025.
- FY2025 revenue up 1.2%, normalised EBIT up 2.8%
- Strong cash conversion ratio at 111%, net debt reduced by 12% to $85 million
- Growth driven by Australia and UK, offsetting New Zealand decline
- Dividend increased 3.3% to 15.5 cents per share, fully franked
- On-market share buyback program of up to $30 million commencing September 2025
Solid Financial Performance Amid Market Challenges
GWA Group Limited has posted a steady financial performance for the full year ended June 30, 2025, with revenue rising 1.2% to A$418.5 million and normalised earnings before interest and tax (EBIT) increasing 2.8% to A$76.3 million. This growth was largely driven by stronger sales in Australia and the United Kingdom, which offset a notable 14.7% revenue decline in New Zealand. The company’s disciplined cost management and strategic focus helped lift the normalised EBIT margin by 0.3 percentage points to 18.2%.
Despite a softening second half, GWA maintained a robust cash conversion ratio of 111%, reflecting effective working capital management and operational efficiency. Net debt was reduced by 12% to A$85 million, marking the lowest leverage ratio (1.1x) since 2018 and underscoring the company’s strengthened balance sheet.
Strategic Initiatives Fuel Growth
Key to GWA’s performance was the ongoing execution of its 'Win the Plumber' strategy, which saw over 26,000 technical interactions with plumbers across Australia and New Zealand, driving a 9% increase in plumber bundle and spares sales. This initiative, alongside new product launches such as the expanded Liano II range and heated towel rails, contributed to growth in the residential and care segments.
The company also highlighted progress in digital initiatives and the implementation of a new ERP system in the UK, investments that are expected to support future operational improvements despite incurring some significant one-off costs in FY25.
Dividend and Shareholder Returns
Reflecting confidence in its financial position, GWA declared a fully franked final dividend of 8.0 cents per share, bringing the full-year dividend to 15.5 cents, a 3.3% increase over the prior year. Additionally, the company announced an on-market share buyback program of up to A$30 million, set to commence on September 2, 2025, signaling a commitment to returning capital to shareholders.
Outlook – Cautious but Opportunity-Focused
Looking ahead to FY2026, GWA adopts a cautious stance amid expected softness in the construction sector and broader economic uncertainties. The company anticipates a slow recovery in residential completions and subdued commercial office builds but sees opportunities in maintenance plumbing, care projects, and affordable housing. Strategic priorities include deepening merchant partnerships, expanding maintenance plumber engagement, and leveraging customer service excellence to broaden product offerings.
While the New Zealand market remains challenging, GWA expects stabilization driven by rising water bills and demand for eco-friendly products. The UK market benefits from new social housing contracts and merchant wins, supporting modest growth prospects.
Bottom Line?
GWA’s disciplined execution and strategic investments position it well to navigate FY26’s headwinds, but market softness and execution risks remain key watchpoints.
Questions in the middle?
- How will GWA’s digital initiatives and UK ERP implementation impact future margins and operational efficiency?
- What is the potential upside if the Australian residential market recovers faster than expected?
- How will the share buyback influence GWA’s capital structure and investor sentiment in the near term?