DGL Reports 4% Revenue Rise but 78% Drop in Net Profit for FY25

Financial Performance and Challenges

DGL Group’s FY25 results reveal a mixed picture. While revenue grew modestly by 4% to $481.5 million, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to $52.1 million. The company’s underlying net profit after tax (NPAT) suffered a more dramatic decline, plunging 78% to just $3.5 million. This sharp drop was driven by operational losses in the lead acid battery recycling segment, increased costs, and significant non-cash write-downs related to goodwill and redundant assets.

Despite these profit pressures, DGL’s operating cash flow improved 20% to $44.7 million, with an operating cash conversion rate of 110%, reflecting strong cash management amid the challenges.

Key Drivers and Operational Responses

The company’s growth was supported by strong demand in crop protection and pest control, chemical manufacturing, and expanded transport and warehousing capacity. Acquisitions completed during the year contributed an additional $16 million in revenue and $10 million in gross margin uplift.

However, these positives were offset by increased price competition in the lead acid battery market, lower mining sector demand, and the normalisation of AdBlue pricing. Inflationary pressures also pushed up people and occupancy costs, while duplication of costs during site transitions and shared services rollout further weighed on profitability.

In response, DGL took decisive actions including closing its loss-making lead recycling operations at Laverton, Victoria, which involved a non-cash write-down of plant and equipment and holding the site for sale. The company also reduced headcount by 4% in the second half of FY25 and is consolidating sites and systems to improve productivity and reduce costs.

Strategic Investments and Integration

DGL is investing heavily in growth initiatives, including expanding manufacturing capacity in crop protection and automotive chemicals, and commissioning a new liquid waste treatment plant in New South Wales expected to come online in FY26. The company is also enhancing its logistics footprint with increased fleet and warehouse capacity across Australia and New Zealand.

Significant progress was made in integrating group-wide systems, with a move to a unified ERP platform, HR/payroll automation, and logistics management systems. These integrations aim to eliminate over 30 standalone IT systems, reduce administration costs, and improve operational efficiency.

Outlook and Market Positioning

Looking ahead to FY26, DGL expects improved profitability driven by the benefits of integration, cost reduction initiatives, and contributions from recent capital investments and acquisitions. The company anticipates normalised trading conditions in crop protection and automotive manufacturing, while continuing to navigate economic uncertainties.

CEO Simon Henry emphasised the company’s transition from a collection of specialised businesses to an integrated industrial group focused on delivering specialised chemical logistics and services more efficiently. With a comprehensive Trans-Tasman footprint and expanding global logistics capabilities, DGL aims to leverage its scale and systems to capture growth opportunities across essential industries.