Kelsian Posts 9.5% Revenue Growth and Cuts Leverage to 2.7x
Kelsian Group reported a strong FY25 with revenue up 9.5% and EBITDA growth of 7.4%, underpinned by contract renewals and operational excellence. The company also advanced key strategic initiatives including a Tourism Portfolio sale and UK expansion.
- Revenue rises 9.5% to $2.21 billion, EBITDA up 7.4% to $285 million
- All divisions report growth in revenue, EBITDA, and EBIT
- Leverage reduced to 2.7x with record operating cash flow of $205 million
- Tourism Portfolio sale process underway alongside UK acquisition
- FY26 guidance targets EBITDA between $297m and $310m with disciplined capex
Robust Financial Performance
Kelsian Group Limited (ASX, KLS) has posted a solid set of full-year results for FY25, reflecting steady growth across its diversified transport operations. Revenue climbed 9.5% to $2.21 billion, while underlying EBITDA increased 7.4% to $285 million, aligning with management’s guidance. Earnings per share before amortisation nudged up 2.2% to 35 cents, underscoring consistent profitability.
All three core divisions, Australian Bus, International Bus, and Marine & Tourism, contributed to the positive momentum, each delivering growth in revenue, EBITDA, and EBIT. The group’s ability to retain or renew all material contracts, combined with operational efficiency programs, has been pivotal in sustaining organic growth.
Strategic Initiatives and Portfolio Management
FY25 saw Kelsian advance several strategic priorities. Notably, the company commenced the sale process of its Tourism Portfolio, which encompasses iconic Australian destinations and a fleet of vessels and resorts. This divestment aims to redeploy capital into core operations and growth opportunities.
Internationally, Kelsian expanded its footprint with the acquisition of Huyton Travel Limited in Liverpool, positioning itself for regional UK franchising opportunities. Meanwhile, in Australia, the purchase of the Hoxton Park bus depot in Sydney and the sale and leaseback of three Western Australian depots reflect a strategic approach to asset management.
Operational Excellence and Sustainability Focus
Operationally, the group reported delivering over 383 million customer journeys in FY25, with a strong emphasis on safety and sustainability. Kelsian achieved a 12% reduction in total recordable injury frequency and maintained zero significant environmental spills. The deployment of 204 zero-emission buses and ongoing electrification of depots highlight its commitment to cleaner transport solutions.
Additionally, Kelsian’s partnerships with community organisations such as the Royal Flying Doctors Service and the Clontarf Foundation reinforce its social responsibility ethos.
Financial Discipline and Outlook
The group’s balance sheet remains robust, with leverage reduced to 2.7 times underlying EBITDA, down from 3.2 times at the end of 2024. Record operating cash flow of $205 million and significant cash reserves provide flexibility to pursue growth while maintaining financial discipline.
Capital expenditure peaked at approximately $165 million in FY25, reflecting investments in new buses, vessels, and infrastructure. FY26 capex guidance is set around $128 million, with a focus on sustaining assets and selective growth projects.
Looking ahead, Kelsian projects underlying EBITDA between $297 million and $310 million for FY26, supported by ongoing contract renewals, operational improvements, and a recovering tourism sector.
Digital Transformation and Future Growth
Kelsian is also progressing a global digital transformation project to unify finance and HR systems, aiming to streamline operations and enhance decision-making. While this initiative entails one-off implementation costs over three years, it is expected to support long-term efficiency gains.
With a diversified business model spanning multiple geographies and transport modes, Kelsian is well positioned to capitalise on macro trends such as urbanisation and decarbonisation. The company’s strategic focus on operational excellence, capital management, and selective growth opportunities sets the stage for continued value creation.
Bottom Line?
Kelsian’s FY25 results confirm a resilient platform and strategic clarity, but investors will watch closely as the Tourism Portfolio sale unfolds and contract negotiations progress.
Questions in the middle?
- How will the Tourism Portfolio divestment proceeds be redeployed to maximise shareholder returns?
- What are the risks and timelines associated with the Sydney Region 6 contract renegotiation?
- How will the digital transformation costs impact near-term profitability and operational efficiency?
