VEEM Limited reports half-year revenue close to guidance with improved cash flow, offset by a significant $24.8 million non-cash impairment tied to its gyro product upgrade. The transition to the new Mark III gyro design has temporarily stalled sales as customers await delivery.
- 1HFY26 revenue approximately $23.4 million, near guidance
- EBITDA slightly negative at -$0.2 million excluding adjustments
- Operational cash flow up 128% to $4.0 million
- Non-cash impairment charge of $24.8 million on gyro development costs and inventory
- Mark III gyro launch causes temporary sales pause with no current orders
Resilient Core Business Amid Market Challenges
VEEM Limited (ASX: VEE), a specialist in marine propulsion and gyro stabilisation systems, has released its preliminary unaudited results for the half year ended 31 December 2025. Despite a challenging market environment, the company’s core operations demonstrated resilience, with revenue expected to reach approximately $23.4 million, just shy of the $24 million to $26 million guidance provided at the November 2025 AGM.
EBITDA, excluding non-recurring accounting adjustments, is anticipated to be a modest loss of $0.2 million, comfortably within the forecast range. Notably, operational cash flow surged by 128% compared to the prior corresponding period, reaching $4.0 million, signalling improved cash management and operational efficiency.
Gyro Product Upgrade Spurs Significant Accounting Adjustments
The standout development for VEEM during the half was the completion of a substantial upgrade to its core gyro stabiliser product line. The new Mark III design incorporates lessons learned from the earlier Mark I and II models, promising enhanced performance, reduced power consumption, greater reliability, and lower maintenance costs. This upgrade is critical for maintaining VEEM’s competitive edge as demand grows across private, commercial, and defence marine sectors.
However, the transition to the Mark III has led to a temporary halt in sales, as customers await availability of the new units, expected by the end of Q3 FY26 for smaller models. This pause has resulted in no current orders despite strong market interest, impacting near-term revenue streams.
Consequently, VEEM has conducted an impairment review of its capitalised gyro development costs, which total $24.2 million on the balance sheet, largely representing the original Mark I and II investments. The review, pending audit and Board approval, is expected to result in a non-cash impairment charge of $24.2 million against these costs, alongside a $0.6 million write-down of obsolete inventory rendered redundant by the Mark III launch.
Strategic Outlook and Balance Sheet Strengthening
VEEM’s management views the Mark III launch as a pivotal step forward, with research and development costs anticipated to have peaked. Future R&D expenses will be expensed through profit and loss, reflecting the product’s maturity stage.
The company remains the sole global supplier of large gyros for marine vessel stability, actively pursuing several significant sales leads. The recent capital raising during 1HFY26 has bolstered the balance sheet, positioning VEEM to capitalise on upcoming market opportunities once the Mark III units become available.
Full audited results are scheduled for release on 25 February 2026, which will provide further clarity on the company’s financial position and operational outlook.
Bottom Line?
VEEM’s bold product pivot and balance sheet reset set the stage for a critical test of market appetite once Mark III gyros hit the water.
Questions in the middle?
- How quickly will customer orders resume once Mark III gyros become available?
- What impact will the $24.8 million impairment have on VEEM’s future profitability and investor sentiment?
- Can VEEM sustain its improved cash flow momentum amid the product transition?