Babylon’s Rental EBITDA Jumps 87% After Matrix and Blue Hire Acquisitions

Strong Start to FY26 Fueled by Strategic Acquisitions

Specialist mining services provider Babylon Pump & Power Limited (ASX – BPP) has kicked off the 2026 financial year with encouraging momentum, reporting a net operating cash inflow of $1.6 million for the September quarter. This positive cash flow was supported by $8.7 million in customer receipts and the recent completion of two strategic acquisitions, Matrix Hydro Services and Blue Hire, which closed on 1 August 2025.

The acquisitions have expanded Babylon’s rental fleet and service capabilities, positioning the company to deliver comprehensive water management and equipment rental solutions across Australia’s mining sector. Babylon’s Managing Director Michael Shelby highlighted the significance of these deals, noting they have broadened the company’s footprint and enhanced its ability to meet growing demand.

Rental Segment Drives Earnings Growth Amid Market Challenges

The rental division emerged as the standout performer, with EBITDA contribution surging 87% compared to the previous quarter. This growth was underpinned by steady test pumping activity in Western Australia and the Northern Territory, alongside new contract wins such as a dewatering project at Cockatoo Island iron ore mine. Additionally, Babylon’s partnership with HIGRA Pumps continues to gain traction, securing new supply and maintenance contracts across multiple sectors.

Integration of Matrix Hydro Services and Blue Hire has proceeded smoothly, with no operational disruptions reported. The company is actively mobilising additional fleet assets to capitalise on anticipated project starts in the coming quarter, signaling confidence in sustained rental demand.

Maintenance Segment Faces Headwinds but Prepares for Recovery

Conversely, Babylon’s maintenance segment remains subdued, reflecting ongoing cost deferrals by coal and iron ore producers amid a challenging market environment. Revenues in this division were materially lower year-on-year, with demand concentrated on parts and components while larger engine rebuilds were postponed. The company has taken a conservative approach to cost and inventory management, using the period to clear internal repair backlogs and enhance customer engagement, particularly in Queensland.

Management anticipates a cyclical rebound in maintenance activity as deferred work programs become urgent, potentially unlocking further growth opportunities in FY26.

Financial Position and Outlook

Babylon drew down a new $16.3 million debt facility during the quarter to fund the acquisitions and refinance legacy debt, ending September with $2.3 million in cash. The company maintains a disciplined focus on cost control and profitable growth, prioritising operating cash flow to meet debt obligations while expanding its rental business.

Looking ahead, Babylon aims to add rental assets subject to funding availability, maximise fleet utilisation, deepen customer relationships through ongoing contracts, and continue integration efforts with a strong emphasis on preserving company culture. The board expressed satisfaction with the rental segment’s growth trajectory and remains cautiously optimistic about the maintenance segment’s recovery potential.