Codan expects first-half FY27 net profit after tax of at least $160 million, powered by a sharp increase in Communications revenue and margins. The company is raising its full-year Communications growth target, while warning that conflict-region demand remains difficult to forecast beyond three months.
- H1 Communications revenue forecast at $400 million to $410 million
- Communications EBIT margin expected at approximately 40%
- Group H1 NPAT forecast at not less than $160 million
- Conflict regions expected to contribute about 50% of Communications revenue
- FY27 Communications revenue growth target lifted to 30% to 40%
Communications revenue surges on conflict-region demand
Codan Limited (ASX:CDA) expects its Communications segment to generate between $400 million and $410 million in H1 FY27, compared with $221.8 million in the prior corresponding period. The result is being driven by unusually strong demand for communications technology used with unmanned systems, alongside broad-based growth outside conflict regions.
Conflict regions account for half of segment revenue
Revenue from conflict regions is expected to represent approximately 50% of Communications revenue in the first half, up from about 20% in the prior corresponding period. Codan said demand in those markets is exceptionally strong, reflecting the performance and reliability of its technology in contested environments, but added that visibility beyond three months remains low.
Operating leverage lifts Communications margin
The higher volume and mix of demand are expected to produce significant operating leverage. Codan is forecasting a Communications EBIT margin of about 40% for H1 FY27, well above the 26% recorded in the prior corresponding period and the 31% achieved across FY26. On the current order visibility through the second quarter, Group NPAT is expected to be at least $160 million, compared with $71.2 million a year earlier and $175.2 million for all of FY26.
Minelab adds a steadier second engine
Metal Detection has also started the year positively. Minelab's H1 revenue run-rate is now slightly above H2 FY26 levels, supported by the recently launched GPZ8000 and Gold Monster 2000 detectors, a favourable gold price and continued expansion in its Rest of World business. The update suggests the earnings uplift is not confined to Communications, although the filing gives no separate first-half revenue or profit forecast for Metal Detection.
Full-year target rises as supply constraints remain
Codan is now targeting FY27 Communications revenue growth of 30% to 40% against FY26, up from the approximately 20% growth target outlined earlier in the year. The company said current indications point to elevated sales order momentum continuing into H2, while cautioning that final product mix, shipments and supply-chain constraints could affect the first-half outcome. The central uncertainty is whether conflict-region demand and the unusually high margin can persist once the current three-month visibility window has passed.
Bottom Line?
Codan has materially raised the earnings trajectory for H1, but the durability of the uplift will depend on conflict-region orders, product mix and supply-chain capacity in H2.
Questions in the middle?
- Will conflict-region demand remain elevated beyond Codan's current three-month visibility window?
- Can the Communications segment sustain margins near 40% once demand and product mix normalise?
- Will supply-chain constraints limit shipments as Communications and Minelab order momentum continues?