Alfabs Australia reported a 28% revenue rise to $55.6 million in H1 2026, but EBITDA fell due to a $2.8 million Dartbrook mine impact and softer engineering margins. The company is investing heavily in mining hire assets and pursuing a strategic acquisition to drive future growth.
- Revenue up 28% to $55.6 million
- Underlying EBITDA down 2% to $12.3 million
- EBITDA impacted by $2.8 million Dartbrook mine administration loss
- Capital expenditure of $15.3 million focused on mining hire fleet
- Pursuing sub-$20 million acquisition to accelerate growth
Strong Revenue Growth Amid Market Challenges
Alfabs Australia Limited has reported a robust 28% increase in revenue for the six months ending December 2025, reaching $55.6 million. This growth underscores the company’s resilience in a challenging market environment, particularly within its mining hire and engineering divisions. However, despite the top-line improvement, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) slipped slightly by 2% to $12.3 million.
Earnings Impacted by Non-Recurring Dartbrook Mine Event
The headline EBITDA figure of $9.5 million was notably affected by a $2.8 million non-recurring charge related to the Dartbrook mine, which entered administration in July 2025. This event led to lower rental income from returned hire equipment and provisions against receivables, dampening overall profitability. Softer margins in the engineering segment, driven by a subdued infrastructure market, also contributed to the earnings decline.
Significant Capital Investment and Growth Initiatives
Alfabs has committed $15.3 million in capital expenditure during the period, primarily targeting its mining hire business. Key projects include the overhaul of a Continuous Miner, with the first AX10 machine nearing completion and scheduled for deployment in March. The company expects most new assets to be ready for hire by the end of June 2026, positioning it well for anticipated demand growth in FY 2027 and beyond.
Acquisition Strategy and Financial Position
In a strategic move to accelerate growth, Alfabs is in advanced due diligence on a complementary underground and hire equipment business acquisition valued under $20 million. The deal, if completed, is expected to meet or exceed return hurdles in its first year and will be financed through additional debt. Consequently, net debt rose to $37.8 million from $20.8 million at the previous year-end, reflecting ongoing investment in fleet expansion.
Dividend Policy and Cost Efficiency Focus
To preserve capital for growth initiatives, Alfabs has suspended its interim dividend and is reassessing its dividend policy. The company is also targeting $2 million in sustainable annual cost savings, primarily through overhead reductions, with more than half expected to be realised in the second half of FY 2026. These measures aim to strengthen the balance sheet and improve operational efficiency.
Outlook and Market Opportunities
Despite ongoing market tightness, Alfabs remains optimistic about FY 2027. The company highlights strong performances in its Asset Remediation, Bat Bags, and Protective Coatings divisions, which helped offset softness in core mining and engineering departments. Notably, Alfabs is well positioned to benefit from infrastructure projects linked to the Brisbane 2032 Olympic and Paralympic Games, with established partnerships and an improving tender pipeline for 2027/2028.
Bottom Line?
Alfabs is navigating near-term headwinds with strategic investments and acquisitions, setting the stage for a stronger FY 2027.
Questions in the middle?
- Will Alfabs complete the planned acquisition and how will it impact earnings?
- How will the company balance debt levels with growth ambitions and dividend policy?
- Can Alfabs sustain cost savings while investing heavily in new assets?