Margin Pressures in FY26 Threaten HiTech’s Growth Momentum After Record Year
HiTech Group Australia has reported its strongest financial year yet in FY25, with solid revenue growth and a robust balance sheet, while facing margin pressures in the first half of FY26 due to government spending shifts.
- Record FY25 revenue of $68.15 million and underlying EBITDA near $9 million
- 10% increase in underlying net profit after tax (NPAT) year-on-year
- Zero debt and strong cash position of $9.65 million at FY25 close
- Margin pressures in H1 FY26 linked to new government supplier arrangements
- Strategic cost reductions and client agreements expected to improve H2 FY26 profitability
Record-Breaking FY25 Performance
HiTech Group Australia Limited celebrated a milestone 32 years in business by delivering its best financial results to date for the fiscal year ended June 30, 2025. The company reported operating revenue of $68.15 million, with an underlying EBITDA of nearly $9 million, marking a modest 1.3% increase. More notably, underlying net profit after tax (NPAT) rose by 10% to $6.64 million, underscoring improved profitability.
These results reflect the resilience and adaptability of HiTech’s business model, which has evolved over three decades to absorb economic disruptions and capitalize on emerging opportunities. The company’s strong balance sheet; with zero debt and a cash balance approaching $10 million; positions it well to navigate future challenges.
Dividend and Workforce Strength
In recognition of its solid financial footing, HiTech declared a fully franked dividend of 5 cents per share, paid in September 2025, bringing total dividends for the year to 10 cents per share. The chairman highlighted the company’s high-performing culture, crediting the dedicated HiTech family of employees for their role in achieving record outcomes.
Government Sector Focus Amid Market Headwinds
HiTech’s core business remains closely tied to government ICT projects, particularly in cyber security and defence digital capabilities; areas of growing importance given global uncertainties. However, the first half of FY26 has presented challenges, with margin pressures emerging due to new supplier panel arrangements and shifts in government spending patterns. These factors have tempered earnings despite revenue holding steady year-on-year.
In response, HiTech has implemented swift measures including securing new client agreements, reducing costs, and focusing on engagements with stronger margins. The company anticipates these actions will drive margin recovery and profitability improvements in the second half of FY26.
Looking Ahead – Opportunities and Caution
Looking forward, HiTech remains optimistic about unlocking new projects following the expected finalization of government budgets in December 2025. The company’s strategy emphasizes long-term partnerships, particularly with the Department of Defence, to sustain annuity revenue streams and support growth.
While macroeconomic headwinds persist, HiTech’s robust cash reserves and zero debt provide a buffer to invest in staff and systems, positioning the company to capitalize on deferred projects and market opportunities. The chairman reaffirmed the commitment to restoring the company’s high growth trajectory and industry-leading margins that have characterised the past decade.
Bottom Line?
HiTech’s FY25 triumph sets a strong foundation, but FY26’s margin pressures will test its adaptability and strategic execution.
Questions in the middle?
- How will new government supplier panel arrangements impact HiTech’s long-term profitability?
- What specific projects or contracts could drive growth in the second half of FY26?
- To what extent will macroeconomic conditions influence government ICT spending in the near term?
