Korvest Faces Engineering Claims Amid Strong Growth and Heavy Spending
Korvest Ltd reported a strong first half for FY2026 with revenue up 17.9% and profit before tax rising 33.2%, driven by growth in its Industrial Products segment and major infrastructure projects.
- Revenue increased 17.9% to $60.3 million
- Profit before tax rose 33.2% to $5.4 million
- Engineering claim costs total $1.435 million with expected recovery
- Record capital expenditure on site redevelopment and fleet expansion
- Interim fully franked dividend of 25 cents per share declared
Strong Revenue and Profit Growth
Korvest Ltd has delivered a robust first half for the 2026 financial year, with revenue climbing 17.9% to $60.3 million and profit before tax increasing by a notable 33.2% to $5.4 million. This performance was largely underpinned by heightened activity in the Industrial Products segment, particularly through its EzyStrut brand, which saw a 19.3% revenue boost driven by multiple major infrastructure projects.
Chairman Andrew Stobart highlighted that the prior comparative period was impacted by one-off operational costs, making the profit uplift more pronounced this half. Despite incurring $1.435 million in engineering claim costs related to a third-party design fault, Korvest expects to recover most, if not all, of these expenses pending supplier settlement.
Operational Highlights and Challenges
The Industrial Products division benefited from improved margins due to favourable product mix and project phasing, with three major projects contributing significantly compared to just one in the previous period. While major project activity can fluctuate, Korvest’s small project market also saw broad-based improvements across most states.
On the production side, galvanising plant volumes improved compared to the prior period but remained below the record levels of the second half of FY25. The business faced rising zinc costs but mitigated this through forward purchasing earlier in the year. Labour costs increased as the company built capacity in anticipation of a major project, which was delayed and is now expected to impact the second half.
Record Capital Investment and Infrastructure Upgrades
Korvest’s capital expenditure hit record levels during the half, with $1.5 million spent on the Kilburn site redevelopment and expansion of the EzyStrut transport fleet by five new trucks. The Queensland branch also relocated to a larger facility, incurring one-off moving costs and higher rent as it transitioned between sites.
The galvanising business underwent a significant Christmas shutdown to replace its main galvanising kettle and install a new burner management system, expected to improve energy efficiency and profitability in the coming months.
Dividend and Outlook
The board declared a fully franked interim dividend of 25 cents per share, reflecting confidence in the company’s financial position. However, the Dividend Reinvestment Plan will not operate for this payment.
Looking ahead, Korvest anticipates increased major project activity in the second half, with two additional infrastructure projects commencing alongside ongoing work. The galvanising business expects higher volumes and improved profitability, supported by better labour management and energy savings from recent upgrades.
While the second half is forecast to outperform the first, it is unlikely to match the record second half of FY25, which benefited from accelerated project supply schedules. Overall, Korvest enters the remainder of FY26 with a strong order book and positive momentum.
Bottom Line?
Korvest’s solid first half sets the stage for a strong finish, but project timing and cost recoveries remain key watchpoints.
Questions in the middle?
- Will Korvest fully recover the $1.435 million engineering claim costs and on what timeline?
- How will delays in major project materials affect second half revenue and margins?
- What impact will the Kilburn site redevelopment and new galvanising equipment have on long-term operational efficiency?
