Waterco FY25: Sales Up 4% to $249.4M, NPAT Falls 31%, Dividend Steady

Navigating Growth Amid Integration Challenges

Waterco Limited has announced its FY2025 financial results, revealing a modest 4% increase in sales revenue to $249.4 million. This growth was underpinned by expanded market share across Australia, New Zealand, North America, Europe, and Asia, alongside operational efficiencies gained from the ongoing integration of Davey Water Products, acquired in September 2023.

However, the company faced margin compression due to cost pressures in a challenging economic environment, including elevated operating expenses and foreign exchange translation losses. These factors contributed to a 2% decline in underlying EBITDA to $33.2 million and an 8% drop in underlying EBIT to $20.6 million. Statutory net profit after tax (NPAT) fell sharply by 31% to $9.6 million, reflecting one-off restructuring costs and FX impacts.

Strategic Integration and Operational Highlights

The integration of Davey is a central theme in Waterco’s FY25 narrative. The company has made significant strides in realising synergies through shared warehousing, freight optimisation, and streamlined manufacturing. Early financial gains from Davey contributed to an 85% sales growth and a 60% EBIT uplift to the group in the initial months post-acquisition. Waterco’s strategy to leverage Davey’s complementary product range and distribution channels is beginning to bear fruit, with cross-selling initiatives and bundled product offerings gaining traction.

Geographically, Waterco expanded its footprint with the establishment of a new subsidiary in the UAE, targeting Middle Eastern growth opportunities. The company also continued to invest in research and development, notably launching IoT-connected heat pumps and preparing for a broader IoT platform rollout in FY26. Swimart, Waterco’s retail franchise, recorded its highest sales, with multiple independent store conversions completed and more planned.

Financial Discipline and Capital Management

Waterco strengthened its balance sheet during FY25, reducing net debt by $8 million and improving gearing from 25% to 17%. Cash and cash equivalents rose to $24.5 million, providing enhanced financial flexibility. The company maintained its fully franked dividend at 15 cents per share, signaling confidence in its earnings quality and future prospects despite the earnings dip.

Leadership changes, including the appointment of a new CFO, have brought sharper financial discipline and improved capital management. Restructuring efforts have streamlined corporate functions and treasury operations, reducing foreign exchange volatility and positioning the group for sustainable growth.

Outlook and Growth Prospects

Looking ahead, Waterco is optimistic about further synergy realisation from the Davey integration, expecting these to enhance margins and operating cash flows in FY26. The company plans to expand its market share in pool and spa products, broaden geographic reach particularly in North America, Europe, and Asia, and continue investing in innovation with IoT-enabled solutions. Selective mergers and acquisitions remain on the horizon to support strategic growth.

Waterco’s vertically integrated model, combining manufacturing, distribution, and retail through Swimart, alongside a strong innovation pipeline and sustainability initiatives, positions it well to capitalise on industry tailwinds such as energy efficiency regulations, water scarcity concerns, and rising demand for connected water management products.