Austin Engineering reported a robust 22.2% revenue increase in FY25, driven by a strong North American expansion and improved margins in Asia Pacific. Despite some operational challenges in Chile, the company’s underlying profits soared, setting a confident tone for FY26.
- Group revenue up 22.2% to $376.7 million
- Underlying NPAT jumps 70% to $40.4 million
- North America revenue grows 54% to $146.8 million
- Statutory EBITDA declines due to Chile start-up costs
- FY26 guidance projects revenue between $390 million and $410 million
Strong Growth Anchored by North American Expansion
Austin Engineering’s FY25 results reveal a company capitalising on strategic geographic expansion and operational improvements. The standout driver was the North American business, which surged 54% in revenue to $146.8 million, now representing nearly 40% of total group revenue. This growth was underpinned by increased manufacturing capacity and a newly leased facility, enabling Austin to meet rising customer demand and navigate tariff challenges through innovative supply chain adjustments.
Profitability Gains Amid Operational Headwinds
While statutory EBITDA fell 4.2% to $41.7 million, largely due to start-up costs associated with a large OEM contract in Chile, underlying EBITDA rose sharply by 29.6% to $55.8 million. Underlying net profit after tax (NPAT) soared 70% to $40.4 million, reflecting the company’s ability to drive margin improvements, particularly in the Asia Pacific region where margins jumped from 11% to 19%. This was aided by the successful relocation of tray manufacturing from Australia to Indonesia, enhancing operational efficiency.
Challenges and Controls in Chile
The Chilean operations experienced revenue growth of 21%, but profit margins were squeezed by capacity constraints and operational inefficiencies. A notable accounting error from FY24 was identified and corrected, leading to a restatement that reduced prior revenue and EBIT figures. In response, Austin has strengthened governance with new regional leadership appointments and tighter financial controls, while shifting some production to its Batam facility to alleviate capacity issues. These measures aim to restore confidence and operational stability in the region.
Cashflow and Order Book Dynamics
Despite strong revenue and profit growth, operating cash flow dropped significantly to $2.6 million from $35.5 million the previous year. This was driven by increased working capital requirements, including inventory buildup and higher trade receivables, particularly in Chile and APAC. The order book also declined 21.3% to $146.9 million, reflecting a cautious near-term demand outlook despite a solid pipeline and improved mining conditions globally.
Outlook and Strategic Focus for FY26
Looking ahead, Austin projects FY26 revenue between $390 million and $410 million, with underlying EBIT expected to range from $40 million to $46 million. The company remains focused on product innovation, manufacturing excellence, and operational efficiency, supported by its AustBuy procurement program and new technology offerings like the austIQ condition monitoring software. The declared fully franked dividend of 1.5 cents per share signals confidence in sustainable cash generation despite recent cash flow pressures.
Bottom Line?
Austin’s FY25 performance underscores its successful North American expansion and operational resilience, but watch closely how it manages cash flow and Chilean recovery in FY26.
Questions in the middle?
- Will Austin’s operational improvements in Chile restore profitability and prevent future accounting errors?
- How will the company address the significant drop in operating cash flow amid rising working capital needs?
- Can the order book rebound to support sustained growth given the cautious near-term demand environment?