RWC Plans US$100 Million FY26 Charge Amid Melbourne Plant Closure

Melbourne Brass Operations to Close Amid Volume Decline

Reliance Worldwide Corporation (ASX:RWC) is set to close its brass casting, forging, and machining facilities in Moorabbin and Braeside, Melbourne, marking a significant restructuring of its manufacturing footprint. The move follows a sustained drop in brass production volumes at these sites, rendering continued operations economically unviable.

The decline stems mainly from automation investments at RWC's Alabama plant in the US, which now assembles SharkBite Max brass fittings closer to North American markets. The SharkBite Max design also reduces brass use per fitting by 20%, compounding volume reductions. Additionally, from 2025, RWC transitioned APAC brass component manufacturing to third-party vendors in Asia, further decreasing demand for Melbourne-produced brass.

Financial Impact and Earnings Outlook

RWC expects to record a one-off net charge between US$100 million and US$110 million in FY26, excluded from operating earnings. This includes approximately US$5 million in redundancy and property exit costs, a US$25 million write-down of tangible assets, and a US$70-80 million impairment of intangible assets including goodwill. Most of this charge is non-cash.

While the APAC region will face an estimated US$9 million EBITDA hit due to reduced intercompany revenue from shifting production, the Americas region is anticipated to deliver an US$18 million annual EBITDA benefit from FY27 onwards. This will result in a net group EBITDA uplift of around US$9 million by the end of FY27, driven by lower costs and reduced US tariff exposure.

Employee Impact and Strategic Supply Chain Shifts

Approximately 85 employees will be affected by the closures in Melbourne. RWC has begun consultations with impacted staff, with the process expected to conclude by July 2026.

The company also anticipates further declines in brass requirements as it advances its strategy to replace brass with stainless steel in key product lines. This aligns with broader supply chain optimisation efforts, including increased reliance on third-party sourcing in Asia and automation in the Americas.

RWC’s Manufacturing Strategy in a Challenging Environment

This restructuring follows a period of tariff pressures and shifting market dynamics that have affected RWC’s Americas segment earnings. The company has been navigating these headwinds with cost-saving initiatives and strategic investments, including new manufacturing capacity in Mexico to mitigate tariff impacts. The Melbourne closures and supply chain realignment are the latest steps in this ongoing optimisation.