Waterco’s EBIT Jumps 16% as Revenue Dips 1.1% in HY26
Waterco Limited reported a modest revenue decline but delivered a strong 13% rise in net profit after tax for the half year ended December 2025, driven by improved margins and operational efficiencies. The company declared a 7 cent fully franked interim dividend and is advancing its manufacturing footprint in Malaysia.
- 1.1% revenue decline to $133.2 million amid competitive and supply chain challenges
- Statutory EBIT up 15.9% to $11.3 million supported by manufacturing insourcing
- Net profit after tax increased 13.4% to $6.7 million
- North America and Europe EBIT surged 219%, Asia EBIT up 1162%, ANZ EBIT down 16%
- Declared fully franked interim dividend of 7 cents per share; debt refinancing underway
Resilient Profit Growth Despite Revenue Pressure
Waterco Limited, a key player in water treatment and pool equipment manufacturing, has reported its interim financial results for the half year ended 31 December 2025. The company faced a slight 1.1% decline in total revenue to $133.2 million, reflecting ongoing competitive pressures in Europe and supply chain adjustments, including the transition of plastics manufacturing to Malaysia.
Despite the revenue softness, Waterco delivered a robust 15.9% increase in statutory EBIT to $11.3 million, underpinned by improved margins and operational efficiencies. The insourcing of plastics manufacturing into Malaysia and integration of Davey operations have been pivotal in reducing production costs and strengthening supply chain control.
Divergent Divisional Performance
The company’s divisional EBIT results reveal a mixed picture. Australia and New Zealand (ANZ) saw EBIT decline 16% to $7.6 million, impacted by supply chain realignment and temporary stock constraints. Conversely, Asia’s EBIT skyrocketed by over 1100% to $2.0 million, driven by strategic manufacturing shifts in Malaysia that boosted margins despite an 8.6% sales drop.
North America and Europe combined posted an 18.3% sales increase and a remarkable 219% EBIT surge to $1.7 million, aided by new distribution channels and stronger demand for Waterco-branded products in Europe. However, North American sales were slightly softer compared to the prior period.
Strategic Investments and Financial Position
Waterco is actively investing in expanding its Malaysian manufacturing capacity to support anticipated growth in the US and European markets and to enhance supply chain resilience. The rollout of a unified global IT platform is planned to commence in the second half of the fiscal year, aiming to improve operational transparency and efficiency.
Working capital improved by $5.56 million to $107.4 million, primarily due to better debtor collections, although creditor balances rose with the insourcing of manufacturing. The company is also progressing a debt refinancing with Westpac Banking Corporation, having received formal credit approval, which will provide a longer-term funding structure and is expected to be reflected in the next annual report.
Dividend and Outlook
The Board declared a fully franked interim dividend of 7 cents per share, payable in May 2026, signaling confidence in the company’s cash flow and earnings stability. While the global environment remains competitive and uncertain, Waterco’s operational improvements and strategic initiatives position it well for future growth.
Bottom Line?
Waterco’s profit resilience amid revenue headwinds and strategic manufacturing shifts set the stage for a pivotal year ahead.
Questions in the middle?
- How will Waterco’s expanded Malaysian manufacturing capacity impact future margins and supply chain stability?
- What are the risks and timelines associated with the ongoing debt refinancing and IT platform rollout?
- Can Waterco sustain or grow EBIT in the ANZ region given current supply chain realignments?
