SDI Faces Sales Declines in Asia and Middle East Amid Production Upgrades

Financial Performance Overview

SDI Limited, a key player in dental restorative and aesthetic products, posted a solid financial performance for the year ended 30 June 2025. Despite a slight 0.7% decline in total sales to $110.4 million, the company achieved a 16.7% increase in net profit after tax, reaching $12.2 million. This profit growth was partly supported by a $1.7 million tax benefit related to prior capital losses in Brazil, while normalised net profit after tax remained stable at $10.5 million.

The company’s earnings per share rose significantly by 16.6% to 10.23 cents, reflecting improved profitability even as EBITDA declined marginally by 2.7% to $21.3 million. Operating expenses increased by 3.5%, driven mainly by inflationary pressures on employment costs and heightened marketing spend for new product launches.

Regional and Product Sales Dynamics

SDI’s sales performance was uneven across regions. European and Brazilian markets showed encouraging growth, with Europe benefiting from strong demand for Aesthetic products and Brazil recovering as distributors normalized inventory levels. Conversely, sales in the Middle East and Asia declined notably, impacted by market-specific challenges and delayed shipments. The Australian market also saw a downturn, particularly in direct exports.

Product-wise, Aesthetic and Whitening categories continued to grow, with Aesthetic sales up 4.0% in local currency and Whitening up 2.0%. However, Amalgam product sales fell sharply by 21.9%, reflecting the product’s declining relevance in many markets. Equipment sales, a smaller segment, also experienced a slight decline.

Margin Improvements and Operational Investments

Gross product margins improved by 80 basis points to 62.9%, attributed to operational efficiencies and a favourable product and geographic mix. The company highlighted that delays in new production machinery limited margin gains this year, but expects these efficiencies to materialize in the first half of FY2026.

Capital expenditure included $4.1 million invested in property, plant, and equipment, alongside $4.4 million in product development. SDI is actively investing in production automation, with new high-speed machines recently acquired and more on order to increase capacity and efficiency. Additionally, the company is progressing plans to redevelop its manufacturing site in Montrose, Victoria, aiming for completion by December 2027 at an estimated cost of $26 million.

Strategic Outlook and ESG Commitment

SDI’s strategic focus remains on expanding its Aesthetic and Whitening product lines, including the recently launched 'Stela' product designed to compete broadly in aesthetic dental categories. The company embraces stringent European regulatory standards as a competitive advantage and plans to launch one to two new products annually.

On the sustainability front, SDI has initiated the development of an ESG risk framework, establishing an internal working group and engaging consultants to guide progress, signaling a growing commitment to environmental and social governance.

Dividend and Capital Structure

Reflecting confidence in its future, SDI maintained its final fully franked dividend at 1.9 cents per share, consistent with the prior year. The Board decided not to offer a Dividend Reinvestment Plan for this payment. The company also reduced net debt by $7.1 million during the year, supported by proceeds from a property sale and strong cash flow from operations.