How Babylon’s Rental Boom Masks a $7.16M Loss in H1 FY26

Financial Overview and Strategic Moves

Babylon Pump & Power Limited has released its half-year results for the six months ending 31 December 2025, revealing a headline loss of $7.16 million. This outcome contrasts with a modest profit of $398,000 in the prior corresponding period but is largely attributable to significant acquisition-related accounting charges and an impairment linked to the divestment of Pilbara Trucks Pty Ltd.

Underlying EBITDA, which excludes non-cash deferred consideration expenses and impairment losses, remained stable at approximately $3 million, reflecting the company’s core operational strength. Babylon’s management emphasises that these adjustments do not impact the Group’s cash generation from its core businesses.

Rental Segment Drives Growth

The standout feature of the period was the rental segment’s transformational performance. Revenues surged by 211.8% to $14.24 million, with underlying EBITDA soaring 221.4% to $5.37 million. This growth was underpinned by the August 2025 acquisitions of Matrix Hydro Services and Blue Hire, which expanded Babylon’s fleet, technical capabilities, and geographic reach.

These acquisitions diversified Babylon’s client base beyond coal into gold and iron ore sectors, reducing commodity concentration risk and enhancing revenue resilience. Fleet utilisation improved steadily through the half, supported by increased demand in the gold sector and the benefits of a larger, more flexible asset base.

Key strategic wins included a three-year pump hire and maintenance contract with Newmont, expected to generate around $3 million annually, and the ramp-up of a dewatering contract at Cockatoo Island iron ore mine. The company also mobilised specialised pumping systems for offshore infrastructure projects and supported emergency services during bushfires in Western Australia, reinforcing its regional presence.

Maintenance Segment Faces Headwinds

Conversely, the maintenance segment experienced a sharp revenue decline of 73.8% to $3.36 million, primarily due to a downturn in the Queensland coal market where clients deferred non-essential maintenance amid cost pressures. Despite these challenges, the segment showed signs of recovery in the second quarter and traded close to breakeven for the half.

Babylon has implemented cost discipline and operational restructuring to right-size this business unit while preserving its core technical capabilities, positioning it to respond when market conditions improve.

Capital Structure and Governance Enhancements

To support its expanded rental platform, Babylon secured a new debt facility with National Australia Bank, providing funding flexibility while maintaining disciplined leverage metrics. The company also completed a 30-for-1 share consolidation in November 2025 to simplify its capital structure and improve institutional accessibility.

Further strengthening the leadership team, Babylon appointed Paul Connolly as Chief Financial Officer in February 2026, bringing extensive experience in senior finance roles within global industrial businesses.

Going Concern and Outlook

The auditor’s review highlighted material uncertainty regarding Babylon’s ability to continue as a going concern, given net current liabilities exceeded current assets at period end. However, the directors remain confident, citing strong operational cash flow, proactive cost management, and anticipated future performance in the rental business.

Looking ahead, Babylon’s strategic focus is on debt reduction and disciplined reinvestment in its higher-margin rental and water management services, while divesting non-core assets such as Pilbara Trucks Pty Ltd to sharpen its business profile.