How Is Adrad’s Heat Transfer Segment Fueling Growth Amid Mixed Half-Year Results?
Adrad Holdings reported a modest revenue rise and a dip in statutory profit for the half-year ending December 2025, while its Heat Transfer Solutions segment showed robust growth. The company declared a fully franked interim dividend, reflecting confidence amid ongoing restructuring.
- Revenue edged up 0.6% to $77.4 million
- Statutory NPAT fell 7.9% to $2.6 million; underlying NPAT rose 20%
- Heat Transfer Solutions segment revenue grew 3.6%, underlying EBITDA up 36.7%
- Distribution segment revenue declined 3.5%, impacted by leadership changes
- Fully franked interim dividend of 1.45 cents per share declared
Overview of Financial Performance
Adrad Holdings Limited has released its half-year results for the period ending 31 December 2025, revealing a nuanced performance across its business segments. The company posted a slight increase in revenue to $77.4 million, up 0.6% from the previous corresponding period. However, statutory net profit after tax (NPAT) declined by 7.9% to $2.6 million, reflecting the impact of non-recurring restructuring costs. When adjusting for these one-off expenses, underlying NPAT actually rose by a notable 20%, signalling improved operational health beneath the surface.
Heat Transfer Solutions Segment Drives Growth
The standout performer was the Heat Transfer Solutions (HTS) segment, which designs and manufactures industrial cooling solutions. HTS revenue increased by 3.6% to $45.2 million, while underlying EBITDA surged 36.7% to $6.6 million. This growth was underpinned by a combination of higher volumes, particularly in off-highway mining and data centre cooling applications, and enhanced manufacturing efficiencies. The segment also advanced prototype development for new markets in South-East Asia and power generation, suggesting a promising pipeline of future projects. Operational improvements included consolidating manufacturing facilities in Thailand to boost workflow and cost-effectiveness.
Distribution Segment Faces Transitional Challenges
Conversely, the Distribution segment, which imports and distributes automotive cooling components, experienced a 3.5% revenue decline to $32.2 million and a 14% drop in underlying EBITDA. The segment underwent leadership changes and branch rationalisation, including opening a new Queensland branch and closing a satellite branch in Dubbo, NSW. While these moves aim to strengthen market coverage and reduce costs, the segment faced headwinds from industry attrition and skill shortages. Nevertheless, inventory availability improved, and new product lines in marine and mining radiators showed early demand, positioning the segment for a potential rebound in the second half of the financial year.
Leadership and Dividend Highlights
Leadership restructuring played a key role during the period, with Paul Proctor appointed CEO and Managing Director, and Donald McGurk assuming the role of Independent Non-Executive Chairman. These changes have already contributed to operational improvements and cost reductions. Reflecting confidence in the company’s outlook, the Board declared a fully franked interim dividend of 1.45 cents per share, representing approximately 45% of statutory NPAT, payable on 9 April 2026. This follows a fully franked final dividend of 2.08 cents per share paid in September 2025.
Outlook and Market Position
Adrad Holdings remains cautiously optimistic about the second half of the financial year. The Heat Transfer Solutions segment’s order book growth and new product developments offer a solid foundation for continued earnings improvement. Meanwhile, the Distribution segment’s recent operational initiatives and product range expansion are expected to support a recovery, though market conditions and customer demand remain key variables. The company’s ongoing focus on manufacturing efficiency and leadership stability will be critical to sustaining momentum.
Bottom Line?
Adrad’s half-year results reveal a company in transition, with strong industrial growth offsetting distribution challenges as it navigates restructuring and market shifts.
Questions in the middle?
- How will the conversion of Heat Transfer Solutions’ prototype projects impact future revenue?
- Can the Distribution segment regain momentum amid competitive and operational pressures?
- What further cost efficiencies or strategic moves might management pursue to enhance profitability?
