ATM FY25: Revenue +13.5% and NPAT +21.1% but cash conversion fell to 73.4%

Operating cash flow fell 21.2% to NZD 201.5m in FY25 even as revenue rose 13.5% to NZD 1.9b and NPAT grew 21.1% to NZD 202.9m — a stark divergence that defines the read on this result. Cash conversion measured as OCF/EBITDA dropped from 109.1% in FY24 to 73.4% in FY25, meaning reported profit grew strongly while cash generation contracted in absolute terms.

EBITDA rose 17.1% to NZD 274.3m and PBT grew 21.5% to NZD 289.3m, with the effective tax rate easing from 35.4% to 33.6%, contributing modestly to NPAT growth. The dominant segment, China and Other Asia, drove most of the revenue gain, growing to NZD 1.3b (68% of group revenue), while the Australia and New Zealand segment was broadly flat at NZD 316.0m with segment margin compressing from 19.9% to 18.2%.

Working capital improved on balance: inventories fell NZD 40.5m to NZD 139.1m (inventory days contracted from 39 to 27), partially offset by a NZD 11.1m rise in trade receivables. The company declared a full-year dividend of 20.0 cents per share — its first ever — representing a payout ratio of approximately 71.3% of NPAT.

OCF fell NZD 54.3m year-on-year despite EBITDA expanding NZD 40.0m. Working capital was a net source of cash (inventories drew down), so the shortfall likely reflects other operating cash movements not captured in the headline working-capital lines. At 73.4% OCF/EBITDA versus 109.1% the prior year, the gap between reported earnings and cash generation is meaningful and warrants scrutiny before drawing conclusions about earnings quality.

The Australia and New Zealand segment is under pressure. Revenue was essentially flat at NZD 316.0m (down NZD 1.3m) while segment contribution margin compressed 1.7 percentage points to 18.2%. In a year of strong group growth, this segment is a drag and its margin trajectory matters for the medium-term mix story.

The inaugural dividend signals a new capital allocation phase. A full-year dividend of 20.0 cents per share at a 71.3% NPAT payout ratio is a substantial first commitment, absorbing a significant portion of free cash flow. The sustainability of this payout depends on whether FY25's cash conversion normalises upward in FY26.

sales are explicitly linked in the filing to revenue continuity, with NZ$100m capital raised and NZ$130m disclosed value.

No formal FY26 earnings targets were included in the extraction data, so direct variance analysis is not possible. The results release references a supply chain transformation and simultaneously announced strategic transactions, suggesting management views the business as entering a new investment phase. The second-half revenue run-rate of NZD 1b against a first-half NZD 893.8m confirms second-half weighting and a building exit rate into FY26.

Without stated guidance, the key question is whether the 13.5% revenue growth rate is sustainable given China IMF market dynamics and whether the cash conversion shortfall is cyclical or structural. The scale of the supply chain repositioning adds execution risk and capital deployment uncertainty that the income statement alone does not capture.

The China and Other Asia segment margin was essentially stable at 25.5% versus 25.4%, supporting the view that growth was not bought through price concession in the core market.

However, the cash flow statement qualifies the income statement read materially. OCF of NZD 201.5m against NPAT of NZD 202.9m (FCF/NPAT of 97.5%) might appear adequate, but this is against a prior year where OCF was NZD 255.7m on lower earnings — FY24's 109.1% OCF/EBITDA conversion was unusually high, and the FY25 level at 73.4% represents a significant normalisation downward. Capex fell sharply from NZD 17.0m to NZD 3.7m, so lower investment is not the driver of lower cash generation. The quality of FY25 earnings is real at the segment level but the cash flow trajectory needs resolution.

This briefing cannot assess the post-transaction financial structure, the revenue continuity of divested operations, or the earnings impact of the supply chain repositioning on FY26 segment reporting.