Oldfields Holdings navigated a challenging first quarter of FY2026 with tight cash flow and subdued sales but made strategic moves to streamline operations and bolster scaffold order backlogs for growth.
- Q1 FY2026 net operating cash outflow of $52.3k despite $5.1m customer receipts
- Significant cost savings via overhead cuts and exit from loss-making operations
- Major shareholder and lender maintain financial support for working capital
- Strong scaffold order backlog of $476k poised for Q2 and Q3 fulfillment
- Capital investments in Western Australia to enhance long-term revenue capacity
A Challenging Start to FY2026
Oldfields Holdings Limited (ASX – OLH) reported a tough first quarter for FY2026, marked by tight cash flow and subdued sales across its paint and scaffold segments. The company recorded a net operating cash outflow of $52,300 despite generating $5.1 million in customer receipts. This shortfall was largely attributed to low inventory levels carried over from the previous quarter, which constrained sales performance.
However, Oldfields has been proactive in addressing these challenges. The company focused on replenishing inventory, particularly in high-demand paint products like rollers and brushes, to support anticipated sales growth in the upcoming quarters. This replenishment was made possible through continued financial backing from its major shareholder and lender, who contributed $220,000 during the quarter.
Strategic Cost Reductions and Operational Streamlining
In response to the cash flow pressures, Oldfields undertook a rigorous review of overheads and non-essential operations. The company successfully identified and implemented meaningful cost savings by cutting non-core expenses and discontinuing loss-making segments. These measures have resulted in a leaner cost base and improved operational agility, setting the stage for a more sustainable growth model throughout FY2026.
Additionally, capital expenditure in Western Australia, particularly on steel scaffold purchases to support two large-scale projects, is expected to enhance the long-term revenue-generating capacity of that branch. The hire and service divisions in Western Australia and South Australia maintained steady performance, providing a stable revenue foundation amid broader market challenges.
Robust Order Backlog and Market Reinvigoration
Oldfields reported a strong scaffold order backlog of $476,000 as it entered Q2, covering various scaffold products including System, Zippy, and Mobile Tower scaffolds. Fulfillment of these orders is anticipated in Q2 and early Q3, subject to shipping timelines. On the paint front, the company is focused on restoring sales volumes in New South Wales through targeted customer acquisition and product innovation, particularly in the Void Protection segment.
Looking ahead, Oldfields is finalizing the appointment of a corporate advisory firm to assist with a future capital raise, signaling a strategic push to strengthen its financial position further. The company aims to leverage improved inventory management, a more efficient sales and distribution framework, and ongoing stakeholder support to drive consistent revenue growth and operational stability.
Outlook and Investor Considerations
With cost reductions in place, a solid scaffold order book, and renewed focus on paint market share, Oldfields is positioned to transition towards self-funding and profitability in the near term. The Board and management remain committed to enhancing shareholder value through disciplined working capital management and strategic capital investments.
While the company’s turnaround strategy shows promise, investors should watch closely for the execution of the capital raise and the pace of sales recovery, particularly in paint segments affected by prior inventory constraints.
Bottom Line?
Oldfields’ Q1 groundwork sets the stage for a critical growth phase, but execution risks remain as it seeks to convert backlog into sustained profits.
Questions in the middle?
- How successful will Oldfields be in securing new capital through its upcoming raise?
- Can the company fully restore paint sales volumes amid ongoing inventory challenges?
- What impact will cost-cutting and operational changes have on long-term profitability?