WestConnex Settlement Drives SCEE to $12.8m Loss Despite Operational Gains

Strong Financial Performance Amid Legal Setback

Southern Cross Electrical Engineering Limited (ASX:SXE) has delivered a compelling first half for FY26, with underlying EBITDA climbing 30.8% to $35.4 million, and underlying EBIT up 25.5% to $29.1 million. This performance comes despite a net loss after tax of $12.8 million, largely attributable to a $46.1 million legal dispute settlement related to the WestConnex arbitration proceedings.

The company’s revenue declined 12.2% to $349.1 million, reflecting the winding down of major projects such as the Collie Battery Energy Storage System (BESS) and the Western Sydney International Airport Terminal. However, gross profit surged 30.3% to a record $65.9 million, with gross margins improving to 18.9% from 12.7% in the prior corresponding period. This margin expansion was driven by favourable project mix and contributions from recent acquisitions like Force Fire.

Diversification and Growth Strategy Paying Off

SCEE continues to diversify across multiple sectors and geographies, with 85% of its order book now concentrated on Australia’s East Coast. The order book increased 6% year-on-year to $710 million, supported by a strong pipeline of infrastructure, data centre, and renewables projects.

The company’s multi-disciplinary approach is gaining traction, combining electrical contracting with adjacent disciplines such as communications, security, fire safety, and manufacturing. This strategy is exemplified by integrated project wins like the Steel River East BESS and DigiCo Data Centre, where multiple SCEE businesses collaborate to deliver comprehensive solutions.

Acquisitions remain a key growth lever, with recent deals including Force Fire in 2025 and MDE Group in 2024. SCEE is actively exploring further acquisition targets to enhance geographic reach and service capabilities, underpinning its ambition to deepen sector presence and broaden its offering.

Robust Balance Sheet and Shareholder Returns

Despite the cash impact of the WestConnex settlement, SCEE maintains a strong balance sheet with $58.8 million in cash and no debt. The company enjoys significant bonding headroom of $53.2 million, supporting ongoing project execution and growth initiatives.

Reflecting confidence in its outlook, SCEE declared a fully franked interim dividend of 2.5 cents per share, continuing a track record of shareholder returns. The company also raised its underlying EBITDA guidance for FY26 to at least $72 million, implying a 31% increase over FY25 and signalling expectations for sustained momentum.

Outlook: Capitalising on Structural Tailwinds

SCEE is well positioned to benefit from structural growth drivers such as the electrification and decarbonisation of the Australian economy, the booming data centre sector, and expanding infrastructure investment. The company’s expertise across electrical services, renewables, and multi-disciplinary offerings aligns closely with these market trends.

With a workforce of around 1,700 employees and ongoing facility expansions, including Trivantage Manufacturing’s floor space doubling in FY26, SCEE is gearing up to meet increasing demand. Its strong pipeline of data centre projects alone exceeds $1 billion over their construction periods, underscoring significant growth potential beyond FY26.