Big River Faces Margin Pressure but Operational Gains Offer Hope for FY26
Big River Industries reported a 2.3% revenue decline for FY25 amid tough market conditions but achieved a notable rebound in the second half, driven by operational efficiencies and cost controls. The company maintains a strong balance sheet and a cautiously optimistic outlook for FY26.
- FY25 revenue declined 2.3% to $405.1 million amid challenging markets
- Underlying EBITDA fell 11.9% to $28.7 million but grew 10.6% in 2H25
- Strong cash conversion at 100.1% and stable gearing at 20.1%
- Final dividend maintained at 2.0 cents per share, 80% payout ratio
- FY26 outlook anticipates modest residential recovery and stable commercial demand
Challenging Year with Signs of Stabilisation
Big River Industries Ltd (ASX – BRI), a leading Australian manufacturer and distributor of timber and building products, reported a 2.3% decline in revenue for the fiscal year ended June 2025, totalling $405.1 million. This downturn reflects ongoing headwinds in the construction sector, including subdued residential volumes and heightened competition. However, the company highlighted a clear improvement in the second half of the year, with revenue decline slowing from 3.3% in the first half to just 1.2% in the latter half, signalling the early impact of stabilisation efforts and growth in core segments.
Operational Discipline Drives Earnings Recovery
Underlying EBITDA fell 11.9% year-on-year to $28.7 million, pressured by revenue softness and cost inflation. Yet, operational efficiencies and targeted cost control initiatives implemented mid-year helped reverse this trend, delivering a 10.6% EBITDA increase in the second half. The company achieved a 2.7% reduction in operating expenses during this period despite inflationary pressures, underscoring disciplined management. Gross profit margin expanded modestly by 20 basis points to 26.2%, supported by pricing discipline and supply chain efficiencies.
Strong Financial Position and Dividend Stability
Big River’s cash conversion remained robust at 100.1%, reflecting solid cash generation across its diversified operations. The gearing ratio held steady at 20.1%, preserving investment flexibility. The company declared a final dividend of 2.0 cents per share, consistent with the prior year, culminating in a total FY25 dividend of 4.0 cents per share and an 80% payout ratio based on underlying net profit after tax. This dividend policy aligns with Big River’s commitment to delivering shareholder value amid market uncertainty.
Diversified Operations and Strategic Focus
Big River operates across multiple Australian states and New Zealand, with a broad product mix spanning frame and truss systems, decorative panels, and engineered timber solutions. The acquisition of the Specialised Laminators Queensland (SLQ) business in May 2024 contributed positively to EBITDA growth. The company’s strategic priorities include growing market share in differentiated product categories, improving margins through supplier alignment and pricing, and ongoing operational enhancements supported by technology upgrades such as ERP system rollouts.
Outlook – Cautious Optimism Amid Market Recovery
Looking ahead to FY26, Big River anticipates a modest recovery in the residential market, supported by early signs of increased housing approvals, lower interest rates, and government stimulus measures. The commercial segment remains stable with solid project pipelines. Queensland, the company’s largest market, is expected to be the fastest-growing region, buoyed by infrastructure investment linked to the 2032 Brisbane Olympics. While challenges persist, Big River’s leaner cost base and strategic positioning provide a strong platform for medium-term growth.
Bottom Line?
Big River’s FY25 results reflect resilience and operational progress, setting the stage for a cautiously optimistic FY26 amid evolving market dynamics.
Questions in the middle?
- How will Big River’s acquisition strategy evolve to capture growth opportunities?
- What impact will the Brisbane 2032 Olympics have on regional demand and margins?
- Can the company sustain margin improvements amid ongoing supply chain pressures?
