RWC’s Rising Costs and Buy-Backs Pose Questions for Future Growth
Reliance Worldwide Corporation reported a solid 5.5% revenue increase and a 13.5% rise in net profit for FY25, driven by the full-year impact of its Holman Industries acquisition and strategic capital returns.
- Revenue climbs 5.5% to US$1.315 billion
- Net profit after tax rises 13.5% to US$125 million
- Adjusted EBITDA grows 9.0% to US$277.7 million
- Declared final unfranked dividend of US2.5 cents per share
- On-market share buy-back of US$19.4 million completed
Solid Growth Backed by Acquisition
Reliance Worldwide Corporation Limited (ASX – RWC) has delivered a robust financial performance for the year ended 30 June 2025, with revenue increasing 5.5% to US$1.315 billion. This growth was underpinned by the first full-year contribution from Holman Industries, acquired in March 2024, which has clearly bolstered the company’s top line and operational scale.
Net profit after tax attributable to members rose 13.5% to US$125 million, reflecting not only higher sales but also effective cost management despite some one-off expenses related to restructuring and integration. Adjusted EBITDA, which strips out these one-off costs, grew 9.0% to US$277.7 million, signaling healthy underlying earnings momentum.
Capital Management Strategy in Focus
RWC’s capital management approach remains balanced, with the company distributing 62% of net profit after tax through a combination of dividends and share buy-backs. The board declared a final unfranked dividend of US2.5 cents per share and committed to an on-market share buy-back totaling US$19.4 million, maintaining its policy of roughly equal allocation between cash dividends and buy-backs.
This strategy aims to deliver shareholder value while accommodating investor preferences for cash returns. The total distributions for FY25 amounted to US$78 million, slightly exceeding the company’s target payout range of 40% to 60% of NPAT.
Balance Sheet and Earnings Per Share
Net tangible assets per share improved significantly to $0.24 from $0.14 the previous year, reflecting enhanced asset quality and retained earnings. Basic earnings per share increased 15% to 16.1 cents, while adjusted earnings per share rose modestly by 1.6% to 19.0 cents, indicating that the company’s profitability gains are translating into shareholder returns.
Despite the positive results, the company faced some one-off costs related to the rationalisation of distribution centres in the Americas, manufacturing footprint adjustments in EMEA, and integration expenses in APAC. These amounted to US$7.9 million in EBITDA terms but were managed effectively to preserve overall profitability.
Looking Ahead
RWC’s performance this year highlights the successful integration of Holman Industries and the benefits of disciplined capital management. However, the company has not provided explicit forward guidance, leaving investors to watch closely how ongoing cost rationalisation and market conditions will impact future earnings growth.
Bottom Line?
RWC’s FY25 results underscore growth through acquisition and shareholder returns, but the impact of restructuring costs and market dynamics will be key to watch next.
Questions in the middle?
- How will ongoing integration costs affect RWC’s profitability in FY26?
- What is the company’s outlook on organic growth versus acquisition-driven expansion?
- Will RWC maintain its current dividend and buy-back payout ratio amid market uncertainties?
