How Saunders’ Aqua Metro Deal Could Transform Its Water Sector Future
Saunders International reported a modest revenue dip and sharp profit decline in FY2025, offset by a transformative acquisition that expands its water infrastructure footprint and doubles its project pipeline.
- FY2025 revenue slightly down 0.7% to $214.5 million
- Adjusted net profit after tax plunged 71.3% to $3.2 million
- Acquisition of Aqua Metro enhances water sector capabilities
- Project pipeline doubled to $4.0 billion, driven by water and defence
- Margin pressures and project delays impacted earnings and EBITDA
A Year of Mixed Results
Saunders International Limited closed FY2025 with a slight revenue decline of 0.7%, reporting $214.5 million compared to $216.1 million the previous year. However, the headline figure masks a more significant challenge beneath the surface – adjusted net profit after tax (NPAT) fell sharply by 71.3% to $3.2 million. This downturn was attributed primarily to unforeseen project delays, adverse weather conditions, and cost pressures during complex project delivery.
Despite these setbacks, Saunders maintained a robust operational cash flow, supported by improved working capital management, and continued to invest strategically in its growth trajectory.
Strategic Acquisition Accelerates Water Sector Growth
A pivotal highlight of FY2025 was Saunders’ acquisition of Aqua Metro, a leading Victorian water infrastructure services provider. This move significantly broadens Saunders’ capabilities in the water sector, adding a $411 million order book and a pipeline exceeding $1.4 billion. Aqua Metro’s expertise in design, engineering, and project execution complements Saunders’ existing portfolio, positioning the company to capitalize on the expanding national water infrastructure market driven by population growth, ageing assets, and climate resilience initiatives.
The acquisition is expected to be earnings per share accretive in FY2026, underpinning Saunders’ strategy to diversify revenue streams and secure annuity-style earnings through long-term framework agreements.
Diversified Portfolio and Expanding Pipeline
Saunders operates across Defence, Water, Energy, and Resources sectors, with a balanced market focus that mitigates risk and ensures consistent income. The company’s total project pipeline surged to approximately $4.0 billion by June 2025, doubling from $2.0 billion a year earlier. This growth is fueled by strong tender activity, particularly in water infrastructure and Defence, where Saunders is executing complex, high-security projects and securing annuity-style maintenance contracts.
Key ongoing projects include major water storage and sewer pipeline upgrades in Victoria, mining infrastructure in Western Australia, and energy sector maintenance programs. The company’s national footprint, including offices across Australia, New Zealand, and Papua New Guinea, supports its ability to deliver across diverse geographies.
Operational and Cultural Advances
Beyond financials, Saunders reported zero lost-time injuries and a 34% reduction in its total recordable injury frequency rate, reflecting a strong safety culture. The company also advanced its sustainability agenda, completing its first Reflect Reconciliation Action Plan and enhancing supply chain transparency. Employee engagement improved markedly, with a company-wide survey participation of 65% and a Net Promoter Score nearly double the construction sector average.
These initiatives underscore Saunders’ commitment to operational excellence, social responsibility, and workforce development as foundational pillars supporting its growth ambitions.
Outlook – Confident but Cautious
Looking ahead, Saunders remains confident in its medium to long-term prospects, buoyed by its expanded water sector presence and a record Defence tender pipeline. However, the company acknowledges ongoing external challenges, including delays in Defence project awards and broader market uncertainties. Saunders expects these headwinds to persist into FY2026 but believes its diversified portfolio and strengthened market position will enable it to navigate the environment effectively.
Bottom Line?
Saunders’ FY2025 results reveal short-term pressures but a strategic pivot that could unlock substantial growth in water infrastructure and Defence sectors.
Questions in the middle?
- How will Saunders manage margin pressures amid rising costs and complex project delivery?
- What integration challenges and synergies will emerge from the Aqua Metro acquisition?
- Can Saunders sustain its tender pipeline momentum in Defence despite ongoing market uncertainties?