Redox Reports $1.244 Billion Sales, EBITDA Falls 12.5% in FY25

• FY25 revenue up 9.4% to $1.244 billion
• Gross profit margin steady at 21.6%, within historical range
• Underlying EBITDAFX and NPATFX declined due to higher costs and inflation
• Three acquisitions completed, expanding product portfolio and market reach
• Final dividend of 6.5 cents per share declared, payout ratio at 85%

Robust Revenue Growth Amid Challenging Market Conditions

Redox Limited has delivered a solid 9.4% increase in sales revenue for the fiscal year 2025, reaching $1.244 billion. This growth was primarily driven by strong volume increases across key segments, despite a backdrop of price deflation and subdued demand influenced by geopolitical and macroeconomic headwinds. The company’s gross profit rose modestly by 1.0%, maintaining a gross margin of 21.6%, comfortably within its historical range of 20-22%.

Notably, Redox expanded its sales team by 7.2%, adding technical staff to bolster its presence in industries such as mining, and broadened its product portfolio with innovative solutions. The company also established new offices in Ohio and New Jersey and set up a Canadian entity, signaling a strategic push into North American markets.

Acquisitions Fuel Growth and Market Diversification

During FY25, Redox completed three acquisitions – a specialty surfactants distributor in July 2024, a solvents and specialty solvent blends distributor in November 2024, and a transformer and specialty oils distributor in April 2025. These acquisitions have been integrated into Redox’s operations, contributing meaningfully to sales growth, particularly in the Crop Protection and Surface Coatings segments. The company plans to continue leveraging its in-house developed ERP/CRM platform, Redebiz, enhanced with automation and AI, to drive productivity and capture further growth opportunities.

Profitability and Cost Pressures

Despite revenue gains, Redox’s underlying EBITDAFX fell by 12.5% to $123.8 million, and underlying net profit after tax (NPATFX) declined 15.6% to $80 million. These decreases reflect increased operating expenses, including wage inflation of approximately 5%, higher headcount costs, and rising storage and distribution expenses. The company’s conversion margin (gross profit to EBITDAFX) contracted by 7 percentage points to 45.3%, though it remains competitive within the industry.

Cash flow from operations was impacted by higher inventories and receivables, alongside timing of tax payments, resulting in a reduction to $48 million from $116 million the previous year. Nevertheless, Redox maintains a strong balance sheet with zero net debt and cash and equivalents totaling $268.6 million.

Dividend and Outlook

Reflecting confidence in its financial position, Redox declared a final dividend of 6.5 cents per share, representing an 85% payout ratio of profits. The company’s dividend policy targets a long-term payout ratio between 60% and 80%. Looking ahead, Redox anticipates ongoing macroeconomic and geopolitical challenges but remains well-positioned to capitalize on growth opportunities, particularly in the US market once demand recovers. The company plans to continue expanding its product portfolio, deepen technical expertise, and pursue strategic acquisitions to accelerate growth.

Overall, Redox’s FY25 results underscore a resilient business model navigating inflationary pressures and market headwinds while investing in capabilities and geographic expansion to sustain its long-term growth trajectory.

Bottom Line?

Redox’s strong revenue growth and zero net debt position set the stage for strategic expansion, but margin pressures warrant close investor attention.

Questions in the middle?

• How will Redox manage margin compression amid ongoing inflation and cost pressures?
• What impact will the integration of recent acquisitions have on future profitability?
• How quickly can Redox capitalize on growth opportunities in the US market as demand recovers?