How Is Big River Industries Turning Margin Gains Into Growth Amid Revenue Challenges?

Navigating a Tough Market

Big River Industries Limited (ASX, BRI) has released its FY25 financial results, revealing a year marked by subdued residential construction activity and ongoing market headwinds. Group revenue declined 2.3% year-on-year to $405.1 million, reflecting softer demand particularly in key states like New South Wales and Victoria, as well as in New Zealand. However, the company’s second-half performance showed signs of stabilisation, with revenue decline moderating from -3.3% in the first half to -1.2% in the latter half.

Margin Discipline and Operational Efficiency

Despite the revenue pressures, Big River managed to expand its gross profit margin by 20 basis points to 26.2%, driven by disciplined pricing strategies, improved supply chain efficiencies, and closer supplier partnerships. Operating expenses rose slightly over the full year but fell in the second half, reflecting the impact of targeted cost control initiatives. These efforts contributed to a 10.6% increase in underlying EBITDA in 2H25 compared to the prior corresponding period, lifting the EBITDA margin by 80 basis points to 7.2%.

Accounting for Impairment and Cash Strength

The statutory results include a significant non-cash impairment charge of $20 million related to intangible assets, reflecting the prolonged softness in the residential housing market where Big River has its greatest exposure. This contributed to a statutory loss after tax of $14.7 million. On a brighter note, the company delivered strong operating cash flow of $28.7 million, achieving a cash conversion rate of 100.1%, underscoring robust cash management and working capital controls.

Strategic Progress and Market Outlook

Big River continues to advance key strategic initiatives, including the rollout of its enterprise resource planning (ERP) system to 75% of targeted sites, network optimisation through site consolidations and upgrades, and supply chain improvements that have enhanced procurement and operational execution. The company’s differentiated product categories, such as lightweight cladding and engineered timber, are gaining traction as part of its medium-term growth strategy.

Looking ahead, the residential market remains soft but early indicators suggest a modest recovery in FY26, supported by lower interest rates and sustained housing demand. Commercial construction activity remains stable with a healthy project pipeline. Queensland, Big River’s largest market, is expected to lead growth, buoyed by infrastructure investment related to the 2032 Brisbane Olympics.

Leadership and Dividend

Enhancing its leadership team, Big River appointed Helen Awali, formerly of Fletcher Building Group, as Executive General Manager – Construction, bringing valuable national operational experience. The company declared a final fully franked dividend of 2.0 cents per share, bringing the total dividend for FY25 to 4.0 cents per share, reflecting confidence in its cash flow generation despite the challenging environment.