Matrix Composites & Engineering Ltd reported a $9.4 million loss for the half-year ending December 2025, driven by a 32% drop in revenue to $26.9 million. Despite the weak first half, the company anticipates a robust second half to meet or exceed last year’s full-year revenue.
- Half-year revenue declined 32% to $26.9 million
- Net loss after tax of $9.4 million versus prior period profit
- Strong order book and major South American project underpin second-half optimism
- Convertible note fully redeemed using new NAB loan facility
- No interim dividend declared amid ongoing investment and fixed costs
A Challenging First Half
Matrix Composites & Engineering Ltd has revealed a difficult start to its 2026 financial year, reporting a net loss after tax of $9.4 million for the half-year ended 31 December 2025. This compares starkly with a $1.0 million profit in the same period last year, reflecting a 32% decline in revenue to $26.9 million. The downturn is largely attributed to the timing of major project manufacturing, which only commenced in November, resulting in a revenue profile heavily weighted towards the second half.
Operational and Financial Highlights
The company’s core business remains the manufacture and supply of engineered composite products and subsea buoyancy equipment, with a significant contribution from a large South American project. Despite the revenue dip, operating cash flow improved to a $1.4 million inflow, aided by collections from projects completed in the prior year. Capital expenditure was restrained at $0.8 million, down from $3.1 million, reflecting efficient use of existing tooling.
Matrix also took a key step in its capital structure by redeeming its convertible note in December 2025, funded through a new $7.5 million loan facility from National Australia Bank. This move simplifies the company’s debt profile but introduces new financial covenants tied to earnings and leverage ratios, which will be closely monitored.
Strategic Outlook and Market Position
Looking ahead, Matrix remains confident in its market leadership in subsea drilling riser buoyancy and is actively expanding into related sectors such as subsea umbilicals, offshore wind, and subsea mining. The company is leveraging its Henderson manufacturing facility and expertise in advanced polymers to diversify into defence, energy, and local resource sectors, aiming to build recurring revenue streams.
Growth in the Production Buoyancy market segment is encouraging, and Matrix is focused on increasing market share through new product offerings and client conversions, particularly in its coating technology division targeting Australia and New Zealand. The company’s strong order book and client demand suggest full-year revenue will match or exceed the prior year’s $75 million, with a busy second half anticipated.
Dividend and Capital Management
Reflecting the first half loss and ongoing investment needs, the board has declared no interim dividend for the period. Shareholders should note the company’s ongoing issuance of performance rights and share options to senior executives, aligning management incentives with long-term value creation.
Conclusion
Matrix Composites & Engineering’s half-year results underscore the cyclical nature of its project-based business and the importance of timing in revenue recognition. While the first half was challenging, the company’s strategic initiatives and strong order pipeline position it well for a recovery in the second half and beyond.
Bottom Line?
Matrix’s ability to convert its strong order book into profitable revenue in the second half will be critical to restoring investor confidence.
Questions in the middle?
- Will the company meet its full-year revenue and margin targets given the heavy second-half weighting?
- How will the new NAB loan covenants impact financial flexibility if earnings fluctuate?
- What progress is being made in diversifying revenue streams beyond traditional subsea buoyancy?