Waterco Reports 62% Profit Surge and Raises Dividends for FY26
Waterco Limited delivered a robust turnaround in FY26 with net profit after tax soaring 61.6% to $15.5 million on modest revenue growth. The company expanded its Swimart franchise, advanced manufacturing insourcing, and boosted dividends to 20 cents per share fully franked.
- Net profit after tax up 61.6% to $15.5 million
- Underlying EBIT rises 20.3% to $24.8 million
- Dividends increased to 20 cents per share fully franked
- Swimart franchise network expands with three new stores
- Strong EBIT growth in North America, Europe, and Asia
Profitability Leaps Amid Modest Revenue Growth
Waterco Limited (ASX:WAT) reported a striking 61.6% jump in net profit after tax for the year ended 30 June 2026, reaching $15.5 million despite only a 1.7% increase in revenue to $259.3 million. Underlying earnings before interest and tax (EBIT) grew a solid 20.3% to $24.8 million, reflecting disciplined cost management and strategic insourcing of manufacturing for critical components.
The company’s EBIT to sales ratio remains below target, signalling room for margin improvement even as the business delivers record profitability. The turnaround was also supported by the elimination of foreign exchange translation losses that had weighed on FY25 results.
Swimart Franchise Expansion and Operational Integration
The Swimart division maintained momentum, expanding its franchise network with three new stores during FY26 and driving growth in retail sales and internal purchases from Waterco. The ongoing Swimart Transformation Project, featuring a refreshed brand identity and a new integrated ERP and point-of-sale system rolled out to 45 locations, aims to boost operational efficiency and franchisee support.
Operational synergies from the integration with Davey Water Products continue to materialise, with warehouse consolidation and supply chain optimisation nearing completion. These efforts underpin expected cost savings starting in FY27 while preserving the distinct brand identities under the company’s “two brands, one backbone” strategy.
International Divisions Drive EBIT Growth
Waterco’s North America and Europe segment recorded a 59% EBIT increase to $7.2 million, driven by strong sales in the US commercial applications market despite tariff headwinds. A new strategic distribution alliance in Europe positions the company for future expansion amid a challenging economic environment.
The Asia and Middle East division posted a remarkable 695% EBIT surge to $5.1 million, supported by an 11% rise in external sales and the insourcing of plastics manufacturing to the Malaysian facility, which is ISO certified for quality and environmental management. The establishment of the Middle East market, despite geopolitical tensions affecting shipping routes, demonstrated resilience with ongoing customer orders and strengthened dealer relationships.
Innovation and Digital Transformation Initiatives
Waterco continues to invest heavily in product innovation to maintain its competitive edge amid increasing foreign competition. Highlights include the launch of Electrochlor GEN2, a smart pool automation platform, and OPTI, a next-generation inline free chlorine sensor with applications extending beyond pools to municipal and industrial water treatment.
The company also unveiled a state-of-the-art B2B trade portal built on BigCommerce, delivering 24/7 self-service functionality and streamlined order management, recently earning an industry award for engineering ingenuity.
Capital Management and Dividend Policy
Waterco declared a fully franked final dividend of 13 cents per share, bringing total dividends for the year to 20 cents per share, up from 15 cents in FY25. The company completed a modest on-market share buyback in FY26 and has authorised a new $2 million buyback program running through to June 2027.
Net debt increased to $31.3 million, reflecting ongoing investments in manufacturing capacity and supply chain enhancements.
Bottom Line?
Waterco’s FY26 results mark a decisive step in its profitability recovery, yet the company’s focus on margin expansion and international growth will be critical to sustain momentum amid competitive pressures and geopolitical uncertainties.
Questions in the middle?
- How will Waterco’s margin improvement efforts translate into sustained EBIT growth in FY27?
- What impact will geopolitical tensions in the Middle East have on Waterco’s expansion plans?
- Can the new B2B trade portal accelerate sales growth across Waterco’s international markets?
