How Babylon Pump & Power’s Newmont Deal Fuels Rental Segment Growth

Strong Cash Flow and Rental Segment Momentum

Babylon Pump & Power Limited (ASX, BPP) has delivered a solid December 2025 quarter, reporting a 32% increase in net operating cash inflow to $2.4 million, supported by a 27% rise in cash receipts to $11.5 million. This performance marks the first full quarter following the strategic acquisitions of Blue Hire and Matrix Hydro Services, which have significantly expanded Babylon's rental capabilities and geographic reach.

The rental segment has emerged as the clear growth engine, posting an impressive $5.3 million EBITDA in the first half of FY26, more than double the prior corresponding period. This growth is underpinned by strong organic demand and the integration of the recent acquisitions, which have diversified Babylon's client base across gold, iron ore, lithium, and other commodities, reducing exposure to any single sector.

Newmont Contract and Strategic Divestment

A highlight of the quarter was securing a three-year pump hire and maintenance contract with mining giant Newmont, expected to generate approximately $3 million in annual revenue. This contract not only validates Babylon's service quality but also provides a stable revenue stream amid fluctuating market conditions.

In parallel, Babylon has streamlined its portfolio by divesting the non-core Ausblast business for $2.8 million in cash, a deal settled in January 2026. The sale, at an EBITDA multiple of approximately 5.6x, reflects Babylon’s focus on its core rental and maintenance services.

Maintenance Segment Challenges and Cost Discipline

While the rental business thrives, the maintenance segment continues to face headwinds, particularly due to reduced spending in the Queensland coal and iron ore sectors. Despite these challenges, Babylon has implemented proactive cost reductions that have stabilised the segment, allowing it to trade close to breakeven in H1 FY26. Management is actively reviewing strategic options for this division, balancing cost control with readiness to respond when market conditions improve.

Leadership and Financial Position

Babylon has strengthened its leadership team with the appointment of Paul Connolly as Chief Financial Officer. Connolly brings over 25 years of experience in finance and treasury roles across global industrial companies, positioning Babylon well for its next growth phase.

At quarter-end, Babylon held $1.2 million in cash and maintained undrawn finance facilities of $7.5 million, providing total funding headroom of $8.7 million. This financial flexibility supports ongoing fleet expansion, contract fulfilment, and operational synergies across the group.

Outlook

Looking ahead, Babylon is focused on capitalising on its rental segment momentum by adding assets and maximising fleet utilisation. The company remains disciplined on financial management, prioritising working capital optimisation and debt reduction. Meanwhile, the maintenance segment’s future remains under review, with management committed to preserving capability while exploring strategic alternatives.