Duratec Limited reported a modest revenue decline in 1H FY26 but posted gains in profitability and maintained its dividend, underpinned by strategic acquisitions and sector diversification.
- Revenue down 4.9% to $273.3 million due to project timing
- EBITDA rose 2.0% to $27.5 million, NPAT up 3.5% to $13.4 million
- Record gross profit and strong margins across all sectors
- Interim dividend steady at 1.75 cents per share, fully franked
- Strategic acquisitions and geographic expansion support growth outlook
Financial Performance Overview
Duratec Limited’s first half results for FY26 reveal a nuanced performance: revenue slipped by 4.9% to $273.3 million compared to the prior corresponding period, primarily due to project timing and delivery phasing in key sectors such as Defence, Mining & Industrial, and Energy. Despite this, the company managed to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) by 2.0% to $27.5 million and net profit after tax (NPAT) by 3.5% to $13.4 million, reflecting improved project profitability and effective cost management.
Gross profit reached a record high for the period, supported by strong margins across all operating segments. This was attributed to Duratec’s strategic focus on self-perform work and early contractor involvement, which enhanced project control and profitability. The company’s earnings per share edged up to 5.25 cents, while the interim dividend was maintained at 1.75 cents per share, fully franked, signalling a balanced approach between rewarding shareholders and investing in growth.
Operational Highlights and Sector Performance
Duratec’s diversified portfolio spans Defence, Mining & Industrial, Building & Facade, Energy, and Emerging sectors such as Marine and Transport Infrastructure. The Defence segment showed promising momentum with early procurement works underway at HMAS Stirling and a solid pipeline of projects, including aviation fuel storage. Mining & Industrial faced some delays in major project awards but expanded its service offerings and geographic reach, notably in Queensland and New South Wales.
The Building & Facade division delivered record revenue, driven by successful conversion of early contractor involvement projects and ongoing heritage and remediation works. Meanwhile, the Energy sector experienced softer revenue in the first half but anticipates stronger growth in the second half, bolstered by recent project awards and strategic acquisitions like EIG (AMD Electrical).
Emerging sectors recorded their strongest performance to date, with multiple marine contract wins and expanding water infrastructure projects supported by increased government investment. Duratec’s strategic diversification into high-security federal and state clients also contributed to this growth.
Strategic Growth and Sustainability Initiatives
Duratec continued to strengthen its balance sheet, with net assets increasing 14% to $84.8 million and borrowings reduced through repayments. The company invested $4.6 million in acquisitions and $3.6 million in plant and equipment, underpinning its growth strategy. Notable acquisitions during the period included RGK Resources, a specialist non-destructive testing company, and AMD Electrical, enhancing Duratec’s capabilities in the energy sector.
On the sustainability front, Duratec implemented new safety and wellbeing frameworks, reduced its injury frequency rates, and progressed climate risk assessments and emissions measurement. The company also advanced its Reconciliation Action Plan and community engagement efforts, reflecting a commitment to responsible business practices.
Outlook and Market Positioning
Looking ahead, Duratec expects a ramp-up in Defence sector activity with significant infrastructure spend planned at HMAS Stirling and Henderson, alongside growth in Mining, Building & Facade, and Energy sectors. The company’s order book and tender pipeline remain robust, supported by master services agreements that provide recurring revenue streams. Further strategic acquisitions are anticipated to complement organic growth and expand Duratec’s footprint, including potential moves into the Pacific region.
Duratec’s ability to leverage its diversified portfolio, combined with disciplined financial management and a focus on innovation and sustainability, positions it well to navigate sector cyclicality and capitalise on infrastructure investment trends across Australia.
Bottom Line?
Duratec’s solid profit growth and strategic investments set the stage for sustained expansion amid sector headwinds.
Questions in the middle?
- How will Duratec’s recent acquisitions translate into earnings growth in FY26 and beyond?
- What impact will the planned $28 billion Defence infrastructure spend have on Duratec’s revenue mix?
- Can Duratec maintain its dividend policy while funding further strategic acquisitions?