Reliance Worldwide Corporation reports a solid 5.5% sales increase and a 13.5% rise in net profit for FY25, boosted by the Holman acquisition, while cautioning on tariff impacts ahead.
- Net sales rise 5.5% to US$1.31 billion
- Reported net profit after tax up 13.5% to US$125 million
- Full-year contribution from Holman acquisition
- Cost savings of US$19.7 million achieved
- FY26 outlook cautious amid tariff-related earnings pressure
Solid Growth Amid Challenging Conditions
Reliance Worldwide Corporation Limited (ASX, RWC) has delivered a commendable financial performance for the year ended 30 June 2025, reporting a 5.5% increase in net sales to US$1.31 billion and a 13.5% rise in reported net profit after tax to US$125 million. These results underscore the resilience of RWC’s core plumbing and water control products business despite persistent market headwinds, including softer demand and tariff uncertainties.
The company’s adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) edged up 1.1% to US$277.7 million, reflecting the full-year integration of Holman Industries, acquired in March 2024. Holman’s contribution was a key driver of growth, particularly in the Asia Pacific region, where external sales excluding Holman rose 2.4% year-on-year.
Operational Efficiencies and Cost Discipline
RWC’s operating margin held steady at 21.1%, slightly down from 22.0% the previous year, impacted by one-off integration and restructuring costs totaling US$7.9 million. Excluding these, the adjusted EBITDA margin was consistent with the prior period at 22.3%. The company achieved nearly US$20 million in cost savings through continuous improvement initiatives and synergies from the Holman acquisition, as well as restructuring efforts in its European manufacturing footprint.
Cash flow generation remained robust, with operating cash flow conversion at 97.6% of adjusted EBITDA. This strong cash position enabled RWC to reduce net debt and lower leverage to 1.30 times, down from 1.59 times a year earlier, reinforcing the company’s financial flexibility.
Dividend and Share Buyback
Reflecting confidence in its financial position, RWC declared a final distribution of 5.0 US cents per share, split evenly between an unfranked cash dividend and an on-market share buyback valued at US$19.4 million. This balanced approach rewards shareholders while supporting capital management objectives.
Cautious Outlook Amid Tariff Pressures
Looking ahead to FY26, RWC anticipates consolidated external sales to be broadly flat or slightly down in the first half, with the Americas region expected to face low single-digit declines after adjusting for prior period sales timing and product line exits. Asia Pacific and EMEA sales are forecast to remain stable.
However, the company warns that new US tariffs will weigh on operating earnings, estimating a net cost impact of US$25-30 million on EBITDA for FY26. These tariff-related costs are expected to disproportionately affect the Americas segment in the first half, leading to a lower consolidated EBITDA margin compared to the prior year. Despite these challenges, RWC expects operating cash flow conversion to remain above 90%, consistent with its long-term target.
Given ongoing economic uncertainties and tariff volatility, RWC has refrained from providing full-year quantitative guidance for FY26, signaling a cautious stance as it navigates a complex global environment.
Bottom Line?
RWC’s FY25 strength sets a solid foundation, but tariff headwinds and economic uncertainty cloud the near-term outlook.
Questions in the middle?
- How effectively will RWC mitigate the US tariff impacts in FY26 and beyond?
- What progress will be made on Holman integration and revenue synergies?
- How will evolving market conditions in the Americas influence RWC’s sales trajectory?