ArborGen Posts Record FY26 Revenue and EBITDA Growth Led by Brazil Expansion

Brazil Expansion Offsets US Market Headwinds

ArborGen Holdings Limited (NZX:ARB) has reported a standout FY26 with group revenue hitting $68.2 million, marking its highest top line in five years. This 8% increase was largely fuelled by Brazil’s forestry market, where local currency revenue jumped 14%, now accounting for 44% of total sales. The company’s strategic pivot to advanced genetics and protected clones in Brazil is paying dividends, as demand for higher quality seedlings continues to grow amid rapid sector expansion.

Meanwhile, the US South, a historically dominant market for ArborGen, remains mired in structural challenges. Sales volumes there declined 4% year-on-year, pressured by a long-term decline in pulp demand and subdued housing construction. However, ArborGen managed to maintain flat revenue in the region by shifting its sales mix towards higher-value products like mass control pollinated (MCP) loblolly pine seedlings and containerised stock, which lifted average selling prices by 6%.

Earnings Surge Driven by Operational Discipline

The company’s adjusted US GAAP EBITDA surged 31% to $11.5 million, comfortably ahead of its February guidance. This uplift reflects not only revenue growth but also improved cost management and operational efficiencies, including the rollout of a new ERP system in April 2026 that enhances production visibility and agility. Despite a net loss after tax of $7.5 million, this represents a significant improvement from the prior year’s $21.5 million loss, helped by a much smaller impairment charge of $1.7 million compared to $21.8 million previously.

ArborGen’s balance sheet shows net debt rising to $25.2 million, reflecting continued strategic investment in capacity and seed supply, particularly in Brazil. The company is actively managing capital allocation, including plans to sell its Ridgeville headquarters building in the US, with proceeds earmarked for debt reduction.

Dual-Pathway Strategy and Market Positioning

CEO Justin Birch emphasised the company’s dual-pathway approach: accelerating adoption of advanced genetics seedlings and strengthening operational infrastructure to meet demand reliably at scale. "Our customers are focused on a 25+ year harvest horizon," Birch said, highlighting growing recognition of ArborGen’s value proposition in both markets.

In Brazil, the conversion of the Erval Grande nursery to pine production and expansion into new regions underline the company’s growth ambitions. The recent appointment of Wagner Itria Jr as General Manager Brazil signals a renewed focus on operational excellence and market penetration.

In the US South, despite the subdued market, ArborGen is adapting to a lower demand baseline by rightsizing operations and focusing on higher-margin products. The launch of simplified pine product categories and the AG Score has helped customers better understand the benefits of advanced genetics, supporting a second wave of MCP adoption.

Outlook Targets Further Earnings Growth

Looking ahead to FY27, ArborGen aims to build on momentum with targeted volume growth in Brazil and some revenue and volume improvements in the US South driven by higher-value products and market share gains. Operational improvements, cost discipline, and increased integration between US and Brazil teams are expected to underpin further EBITDA gains.

While the US market remains challenging, ArborGen’s strong foothold in advanced genetics and its expanding Brazilian platform provide a resilient foundation. The company’s focus on cash generation and debt reduction will be critical as it navigates ongoing sector headwinds and capitalises on long-term forestry trends.