NPAT halved despite flat EBITDA as H2 swung to a loss

The damage occurred below the EBITDA line: higher depreciation and finance costs pulled operating profit down 22.2% to $81.3m, PBT growth was -31.4% to $61.6m, and a jump in the effective tax rate from 27.8% to 49.0% widened the gap to NPAT.

The H2 shape is sharper still. With HY24 NPAT already $33.4m, implied H2 NPAT was -$2.1m. Operating cash flow slipped 4.8% to $56.9m while capex was scaled back 35.1% to $66.0m, and the dividend was held at 20c, lifting the NPAT payout ratio to 64.5% from 31.2%.

The release highlights Operating EBITDA up 7% and Operating NPAT up 1% to $59.7m, but statutory NPAT fell to $31.4m and statutory revenue declined 0.8% rather than rising 1%. With the bridge between operating and reported measures not detailed in the supplied excerpts, the cleaner operating read is PBT growth of -31.4%.

The capex cycle is now in the P&L and balance sheet. Capex of $66.0m (17.4% of revenue) follows $101.7m in FY23. Gross borrowings of $369.5m against $9.4m cash leave net debt at $360.1m and net debt/EBITDA at 2.8x. Rising depreciation and interest - not trading volume or price - are doing most of the work in compressing reported profit.

Working capital tightened on receivables. Trade debtors rose 42.3% to $76.4m and receivable days extended from 51 to 74. Inventories fell $27.8m (-13.3%), softening the cash impact, but the receivables extension is the harder signal: distributors paying more slowly, or sales loaded into the back end of the year.

With HY24 NPAT of $33.4m and FY24 NPAT of $31.4m, the implied H2 loss sets a low base for FY25 comparisons but also signals that the H2 pressure - whether finance cost, FX, mix or tax - was running at the balance date.

Global case sales of 3.6m were down 2% on FY23 despite price increases. The supplied excerpts do not provide guidance on volumes, vintage release, or the trajectory of finance costs as the heavy capex cycle moderates, so investors must judge from the second-half run-rate rather than a stated path.

Cash conversion deteriorated, with OCF/EBITDA falling to 44.3% from 46.6%, and free cash flow before leases remains negative at -$9.1m (vs -$42.0m prior). The improvement in FCF reflects spending less, not earning more.

The 49.0% effective tax rate is more than 21 percentage points above the prior comparable, and the release excerpts do not explain it. If one-off, NPAT understates a normalised result; if structural, it persists. Either way, PBT growth of -31.4% is the more reliable operating read.

The held 20c dividend, with payout at 64.5% of NPAT and FCF pre-lease still negative, is being funded from the balance sheet rather than free cash flow generated in the year. That is sustainable while the syndicated facility headroom is available, but it is not self-funding distribution.

This briefing cannot assess vintage quality, FX hedging mechanics, distributor inventory positions, or the syndicated facility covenant headroom beyond what is implied by the disclosed numbers.