DGL Group Limited (ASX: DGL) posted a statutory net loss of $12.8 million for the half year ended December 2025, impacted by non-cash write downs and operational costs, while progressing strategic initiatives including warehouse expansion and a new liquid waste treatment plant.
- Sales revenue declined 5.8% to $225.2 million
- Underlying EBITDA fell 5.0% to $24.7 million
- Statutory net loss widened to $12.8 million
- Net debt reduced by $16.4 million to $78.2 million
- New $120 million ScotPac facility replaces previous financing
Financial Performance Reflects Market Headwinds
DGL Group Limited (ASX:DGL) reported a 5.8% decline in sales revenue to $225.2 million for the half year ended 31 December 2025, compared to the prior corresponding period. Underlying EBITDA decreased by 5.0% to $24.7 million, while underlying net profit after tax (NPAT) fell to $0.3 million, down $1.4 million year-on-year. The company recorded a statutory net loss after tax of $12.8 million, a significant deterioration from a $2.2 million loss in the previous period, primarily driven by non-cash write downs of property, plant and equipment, assets held for sale, and one-off audit-related costs.
Gross profit declined by 5.0% to $97.9 million, though gross margin improved slightly to 43.5% from 43.1%. The revenue decrease was materially influenced by the sale of the loss-making Laverton lead acid battery recycling site, which had contributed $9.8 million in revenue in the prior period. Manufacturing and Logistics divisions maintained solid performance despite challenges including driver shortages and increased costs related to facility expansion and new system implementations.
Balance Sheet Strengthened Through Refinancing and Asset Sales
DGL reduced its net debt by $16.4 million during the half to $78.2 million, down from $94.6 million at 30 June 2025. This improvement was supported by the completion of a new $120 million finance facility with ScotPac Business Finance in March 2026, replacing the previous syndicated arrangement. The new facility offers greater flexibility and aligns better with DGL’s operational needs. This refinancing effort follows an earlier extension of the syndicated debt facility and is part of the company’s broader financial management strategy to maintain a prudent debt level and a strong balance sheet.
During the period, DGL also completed the sale of its Tomago and Seven Hills sites in New South Wales, consolidating operations to optimise occupancy costs and productivity. The disposal of the Laverton battery recycling plant further reduced exposure to loss-making assets. The combined proceeds from these sales exceeded the book value of the assets disposed.
Strategic Investments and Operational Consolidation Underway
DGL is advancing several strategic initiatives aimed at organic growth and operational efficiency. The company increased warehouse capacity, including a $1.9 million investment in a vacant site in Christchurch, New Zealand, where construction of a state-of-the-art warehousing facility is expected to complete by the end of FY26. Additionally, the new liquid waste treatment plant at Unanderra, NSW, has experienced delays but is progressing with commissioning anticipated by the end of FY26. This facility will expand liquid waste treatment capabilities and introduce plastic packaging recycling as a new revenue stream, with customer interest reportedly strong.
Operational consolidation continues with the implementation of a group-wide HR and Payroll system completed, and the rollout of a new enterprise resource planning (ERP) and logistics management system planned by the end of FY26. These systems are expected to deliver cost savings, productivity improvements, and enhanced customer service. The company is also rationalising its transport fleet and investing in more efficient trailing equipment to support these goals.
Audit Completion and ASX Reinstatement Progress
DGL’s new auditor, BDO Audit Pty Ltd, completed a full audit of the half year results, issuing a modified opinion related to inventory opening balances but confirming the financial statements present a true and fair view and comply with accounting standards. This audit follows a disclaimer of opinion from the previous auditor for the 2025 full year and was a condition for reinstatement of DGL’s shares to quotation on the ASX. The company is currently in discussions with the ASX regarding the timing of reinstatement, aiming for the earliest possible opportunity.
The audit completion and ongoing refinancing efforts build on earlier steps, including a syndicated debt extension and waiver to avoid default during the ASX suspension period. These developments are part of a broader effort to stabilise the company’s financial position and restore investor confidence, as detailed in the recent $120M facility with ScotPac.
Navigating Volatile Market Conditions
DGL acknowledges the uncertain economic environment marked by volatile international commodity prices and logistics disruptions, exacerbated by geopolitical tensions affecting oil-based commodities and supply chains. The company is actively managing supply logistics to mitigate these challenges. While the first half of FY26 was difficult, DGL expects improved financial results in the second half, contingent on the evolving market conditions and successful commissioning of new facilities.
Bottom Line?
DGL’s H1 FY26 results highlight operational and market pressures, but strategic investments and refinancing position the company for potential recovery amid ongoing uncertainties.
Questions in the middle?
- How will the commissioning of the Unanderra liquid waste plant impact DGL’s earnings in FY27?
- What are the expected cost savings and productivity gains from the new ERP and logistics systems?
- When will the ASX reinstate DGL’s shares following the completed audit and what market reaction might this trigger?