Schaffer Reports $22.2 Million NPAT with Mixed Segment Results and Stable Dividends

Profit Dip Masks Mixed Segment Performances

Schaffer Corporation (ASX:SFC) closed FY26 with a statutory net profit after tax of $22.2 million, down 8.6% from $24.3 million the year before. The decline belies a tale of resilience and challenges across its divisions. Automotive Leather staged a strong second-half recovery after a cyberattack at Jaguar Land Rover disrupted production for nearly two months in the first half. Meanwhile, Delta grappled with a tough market environment, posting a loss, but ended the year with a robust order book for FY27.

Automotive Leather’s Recovery and New Contracts

Automotive Leather’s revenue fell 5% to $176.3 million, but the segment’s profit was hit harder, down 28% to $11.8 million. The first half was marred by the Jaguar Land Rover cyberattack, which halted production and delayed new, complex program launches. However, a 17% rebound in second-half sales to $95.2 million and a 57% jump in half-year profit to $7.2 million signalled stabilisation. The segment has secured new programs with Jaguar Land Rover in Europe and Chery and Mercedes in China, set to launch in early FY27, positioning it for growth despite ongoing risks from currency volatility and geopolitical uncertainties.

Delta’s Loss Reflects Industry Headwinds but Order Book Strengthens

Delta’s revenue halved to $13.9 million as Western Australia’s civil infrastructure spending slowed sharply, intensifying competition and squeezing margins. The division swung to a $1.3 million loss from a $4.9 million profit the prior year. Yet, a strong FY27 order book suggests a return to profitability is on the horizon, contingent on navigating labour shortages, inflationary pressures, and project delays.

South Connect Jandakot Boosts Investment Portfolio

Schaffer’s property arm shone, with South Connect Jandakot achieving a milestone by commencing construction of its first 13,500-square-metre warehouse in February 2026. The estate’s valuation jumped 21% to $121.4 million, driven by a $14.6 million land revaluation and $6.6 million in capital expenditure. This build-to-lease project, expected to complete in early 2027, taps into Perth’s tight industrial property market and growing demand for logistics and last-mile warehousing. The total investment portfolio’s pre-tax net equity value rose 6% to $240.9 million, or $17.76 per share, reflecting gains in property and managed equity funds despite some softness in US multi-family property valuations.

Capital Management and Dividend Policy

Cash flow from operations was $23.9 million, down from $29.9 million the previous year, as working capital remained stable and non-cash unrealised gains bolstered results. Capital expenditure increased to $12.3 million, largely funding property development and automation investments in Automotive Leather. The company maintained its fully franked dividend at 90 cents per share for the full year, with a final dividend of 45 cents declared, payable in September 2026. A modest share buy-back program continued, reducing issued capital by $527,000.