Korvest expects its first-half FY27 trading result to come in significantly above the prior corresponding period and ahead of the stronger second half of FY26. The outlook follows record FY26 revenue, a growing order book and major investment in manufacturing capacity.
- FY26 revenue rose 8.3% to $129.5 million
- Profit after tax was $12.4 million, below the FY25 record
- Record $11 million capital expenditure included a new Kilburn factory
- FY27 began with a record and growing order book
- First-half FY27 result includes $1.1 million from a prior-year claim settlement
Korvest guides to a stronger FY27 first half
Korvest Ltd (ASX:KOV) has opened FY27 with a rare combination of a record order book and an explicit earnings upgrade in prospect, saying its first-half trading result is expected to be significantly higher than the prior corresponding period and above the stronger second half of FY26.
The company said the first quarter maintained the momentum built in the second half of FY26, with particularly strong activity in its day-to-day and small-project markets. Data centre wins have continued to expand the order book, while major project activity remains solid. The expected first-half result will also include $1.1 million of income from a claim settlement relating to costs incurred in earlier years.
Record sales came with lower profit
Korvest delivered record FY26 revenue of $129.5 million, up 8.3%, but profit after tax eased to $12.4 million from the FY25 record. Management attributed the comparison partly to the absence of the large accelerated infrastructure project that had contributed strongly in FY25. The second half accounted for 53% of annual revenue and 56% of net profit after tax, pointing to a business that gathered pace as the year progressed.
EzyStrut benefited from stronger smaller-project and day-to-day demand, alongside continued major project work and rising data centre activity. Renewable energy opportunities, including battery energy storage systems and pumped hydro generation, were also identified as areas with meaningful growth potential. Galvanising volumes reached a record, supported by internal work, South Australian fabrication activity and completion of a major renewable energy project.
Kilburn factory moves towards full capacity
Korvest spent a record $11 million on capital expenditure in FY26, including about $7 million for a new 3,500 square metre factory at Kilburn and associated equipment. The facility was completed in August, ahead of schedule and within budget, adding capacity to key product lines while creating room for new products and processes. Welding fabrication has begun, with laser cutters and roll-formers being installed progressively and full capacity expected by February 2027.
The investment program also included larger EzyStrut branches in Western Australia and Queensland, a dedicated New South Wales warehouse for data centre products and the final additions to the truck fleet. The company had previously entered FY27 with record work on hand after completing the Kilburn factory, making order conversion and the pace of commissioning the immediate tests of the expansion.
Costs and cash remain part of the equation
The growth outlook is not without friction. Stainless steel prices rose with nickel, fuel and transport costs spiked amid Middle East tensions, and occupancy, staffing and depreciation expenses increased. Korvest also used cash reserves to fund the capital program and the additional working capital required for higher debtor and inventory balances, while keeping its final dividend unchanged at 40 cents and reactivating its dividend reinvestment plan.
In galvanising, a new kettle and upgraded burner management system were installed during the year-end shutdown, with a second stage of burner upgrades planned for late in the first half of FY27. Management said gas consumption fell 7% on a volume-adjusted basis, although total Scope 1 emissions rose 22% because of higher galvanising volumes and the first full year of in-house outbound freight. The next reported result will show whether the new capacity and order book are translating into profit after these higher operating and investment costs.
Bottom Line?
The immediate catalyst is the first-half FY27 result, where underlying trading momentum and the $1.1 million claim settlement will need to be separated to assess the expansion's operating lift.
Questions in the middle?
- How much of the growing order book can Korvest convert into revenue and profit as the Kilburn factory ramps towards full capacity?
- Will data centre demand remain strong enough to offset higher staffing, depreciation, transport and material costs?
- How will cash flow and dividend funding look once the major capital investment cycle begins to ease?