Star Combo profit falls 90% as retail exit weighs on FY2026

Revenue Decline Overshadows Manufacturing Expansion

Star Combo Pharma Limited (ASX:S66) has finished the year with a larger factory but a much smaller earnings contribution. Revenue fell 15% to $23.57 million in FY2026, while profit before tax dropped to $528,472 from $5.31 million a year earlier.

The result reflects two deliberate changes and one weaker trading line: the AustoYou and Koala Mall retail businesses were closed in November 2025, OEM revenue contracted, and demand remained challenging. Core OEM and Own Brands revenue declined 10% to $23.2 million, although the company said Own Brands products grew 7.1%. The half-year report had already recorded a 23% revenue decline after the retail exit and the loss of a major OEM contract, as detailed in the H1 revenue decline.

Building 2 Doubles Production Capacity

Against that weaker revenue base, Star Combo completed the restoration and enhancement of its Building 2 manufacturing facility. The company says the project doubles production capacity and is intended to support its Living Healthy, Costar, Amax and J&K product lines in Australia and overseas.

Property, plant and equipment increased to $20.66 million from $18.44 million, with $2.45 million spent on plant and equipment during the year. The expansion was foreshadowed in the prior-year results, which identified a plan to increase production capacity by the end of FY2026, while the latest report says the company is now focused on growing contract manufacturing in Australia and Asia.

Cash Reserves Support Dividend Despite Lower Earnings

Star Combo generated $3.28 million in operating cash flow, down from $11.94 million in FY2025, and declared a third consecutive fully franked dividend of $400,000. The financial statements show $3.91 million in cash and $14.10 million in term deposits at year-end, or roughly $18 million across the two categories.

That liquidity sits alongside relatively modest borrowings, although lease liabilities rose to $4.15 million. The company also reported net tangible assets per share of $0.28, compared with $0.27 a year earlier. The headline profit measure is less flattering: net profit for the year was $394,606, with basic earnings per share falling to 0.003 cents from 0.03 cents.

Smithfield Lease Renewal Becomes a Key Milestone

The most concrete medium-term uncertainty is not on the production line but under it. Star Combo’s 10-year lease at 171 Woodpark Road, Smithfield, houses its manufacturing and warehousing operations and expires on 31 October 2027. The company said negotiations with its landlord are under way, without disclosing proposed terms or the likely cost of any renewal.

Management expects the OEM contraction to reverse in 2027 and has set priorities around higher contract-manufacturing volumes, improved margins and broader Asian distribution. Those ambitions now face the practical test of demand: the enlarged facility must attract enough customer work and proprietary-product sales to absorb the investment, while input costs, regulatory requirements and competition continue to pressure profitability.