G8 Education Faces Affordability Headwinds but Maintains Dividend and Buyback
G8 Education reported a 3.7% revenue decline but a 12.4% rise in net profit for the first half of 2025, amid ongoing cost-of-living challenges impacting occupancy. The company declared a dividend and announced a share buyback, underscoring confidence despite sector headwinds.
- Revenue down 3.7% to $465.4 million due to lower occupancy
- Statutory net profit after tax up 12.4% to $22.5 million
- Operating EBIT increased 2.8% to $40.5 million
- 94% of centres rated meeting or exceeding National Quality Standard
- Declared 2 cent fully franked interim dividend and 5% on-market share buyback
Financial Performance Amidst Challenges
G8 Education Limited, a leading early childhood education provider in Australia, has released its half-year results for the period ending 30 June 2025. Despite a 3.7% decline in revenue to $465.4 million, the company reported a notable 12.4% increase in statutory net profit after tax (NPAT) to $22.5 million. Operating earnings before interest and tax (EBIT) also rose by 2.8% to $40.5 million, reflecting effective cost management strategies in a challenging economic environment.
The revenue dip was primarily attributed to lower occupancy rates, which fell to 64.5% from 68.2% in the prior comparable period. This decline is linked to ongoing cost-of-living pressures impacting families’ affordability, a trend that continues to weigh on enrolment and booking frequency.
Safety and Quality at the Forefront
G8 Education emphasized its unwavering commitment to child safety and quality education. The company has accelerated initiatives such as CCTV rollout across centres and partnerships for specialised child safety training. Impressively, 94% of its centres are rated as meeting or exceeding the National Quality Standard, outperforming the sector average by three percentage points.
CEO Pejman Okhovat highlighted the company’s focus on embedding core values and strengthening workplace culture, which has led to improved employee retention and engagement. Team engagement scores rose by 2% to 77%, surpassing sector benchmarks, and family satisfaction improved with a 4-point increase in Net Promoter Score (NPS).
Strategic Responses and Outlook
In response to the occupancy challenges, G8 Education is implementing targeted strategies including tailored support for underperforming centres, enhanced enrolment and transition programs, and agile network planning. The company also continued network optimisation by divesting four centres and surrendering three leases.
Financial discipline remains a priority, with the group maintaining a strong balance sheet characterized by low leverage and robust liquidity. Reflecting confidence in its outlook, G8 Education declared a fully franked interim dividend of 2 cents per share, representing 69% of NPAT, and announced an on-market share buyback of up to 5% of issued capital.
Looking ahead, the company anticipates full-year earnings to be in line with 2024, while navigating a sector marked by regulatory uncertainty and macroeconomic pressures. Encouraging medium-term indicators such as expected interest rate cuts, reduced inflation, and improving birth rates offer some optimism for demand recovery.
Bottom Line?
G8 Education’s disciplined approach and strategic initiatives position it to weather near-term pressures while laying groundwork for sustainable growth.
Questions in the middle?
- How will ongoing cost-of-living pressures continue to affect occupancy and revenue?
- What impact might regulatory changes and sector incidents have on G8’s operational risk profile?
- Can the planned share buyback and dividend sustain investor confidence amid market uncertainties?
