Computershare has reported a 12% increase in EBIT excluding Margin Income for 1H26, alongside a 22% rise in its interim dividend, demonstrating resilience in a lower interest rate environment. The company also upgraded its FY26 EPS guidance, reflecting confidence in ongoing earnings growth.
- 12.0% growth in EBIT excluding Margin Income
- Interim dividend increased by 22% to AUD 55 cents per share
- Margin Income declined 5.4% but cushioned by natural hedge
- Debt leverage reduced to 0.3x, strengthening balance sheet
- FY26 EPS guidance upgraded to around 144 cents per share
Strong Earnings Growth Despite Lower Interest Rates
Computershare has delivered a robust first half for fiscal 2026, reporting a 12% increase in earnings before interest and tax (EBIT) excluding Margin Income (MI). This growth was accompanied by a margin expansion to 16.0%, up 70 basis points from the previous corresponding period. The company’s ability to grow earnings in a challenging low interest rate environment underscores the strength of its diversified business model.
Dividend and Balance Sheet Highlights
Reflecting confidence in its financial position, Computershare announced a 22% increase in its interim dividend to AUD 55 cents per share. This marks a significant step-up from the prior year and signals management’s commitment to returning value to shareholders. Meanwhile, the company has successfully reduced its debt leverage ratio to 0.3 times EBITDA, bolstering its balance sheet and providing capacity for future investments.
Margin Income Resilience and Hedging Strategy
Margin Income, a key revenue component sensitive to interest rates, declined by 5.4% due to lower cash rates globally. However, Computershare’s natural hedge strategy mitigated much of this impact, limiting the total interest rate effect to just $8 million or 1.5% of profit before tax. The hedge book has locked in $1.5 billion of Margin Income over the next five years, providing earnings stability amid fluctuating rates.
Growth in Event and Transactional Revenues
The company also reported a strong 12.9% increase in Event and Transactional revenues, driven by solid performances in Employee Share Plans and initial public offering (IPO) activities. This growth reflects Computershare’s expanding footprint in corporate trust and share registry services, supported by ongoing investments in technology and client platforms.
Upgraded FY26 Guidance Signals Confidence
Management upgraded its full-year 2026 earnings per share (EPS) guidance to approximately 144 cents, representing around 6% growth over the prior year. This revision factors in expected EBIT growth of about 10% excluding Margin Income and anticipates continued benefits from lower interest expenses and cost efficiencies. The outlook excludes contributions from the recently divested UK Mortgage Services business, indicating a focus on core operations.
Bottom Line?
Computershare’s resilient earnings and upgraded guidance highlight its strong positioning, but investors will watch closely how it navigates ongoing interest rate volatility and cost management.
Questions in the middle?
- How will Computershare sustain Margin Income amid prolonged low interest rates?
- What impact will the divestment of UK Mortgage Services have on future earnings?
- How effectively can cost-out programs offset inflationary pressures going forward?