EBITDA collapsed 44% as NZ construction downturn hit revenue 12% lower

What changed

Revenue fell NZD$16.1m (-12.4%) to $114.1m, driven almost entirely by New Zealand, where revenue dropped to $70.8m from $87.0m as residential and commercial construction demand continued to weaken. Australian revenue was effectively flat at $43.2m versus $43.2m prior, holding its ground.

The revenue decline fed through harshly to EBITDA (before significant items), which fell 44.1% to $9.2m from $16.5m. Gross margin compressed 274 basis points to 39.4% from 42.2%, suggesting the fixed-cost base absorbed a meaningful share of the volume shortfall. Profit before significant items, interest, and tax fell to $0.3m from $7.5m.

The NPAT loss narrowed to $5.0m from $9.2m, but the prior period included a $9.1m intangible impairment linked to the New Zealand construction outlook — removing that distortion, the underlying trajectory worsened materially. PBT for HY25 was a loss of $6.8m, against a prior period where no comparable PBT figure was disclosed.

Operating cash flow fell sharply to $3.4m from $13.4m. Cash conversion deteriorated to 36.6% of EBITDA from 81.2% in HY24. Net debt rose to $55.2m from $52.8m, with gross borrowings increasing $5.1m to $64.6m. Total equity eroded by $23.0m (-34.7%) to $43.5m, reflecting accumulated losses.

What matters

• Leverage is the dominant risk. Net debt to EBITDA has worsened to approximately 6.0x from 3.2x — MPG's own commentary acknowledges the business "carries too much debt for this stage of the economic cycle." With HY25 EBITDA at $9.2m and FY24's implied second half producing a negative EBITDA of approximately -$4.2m (i.e., FY24 EBITDA was first-half-loaded), any second-half softness in HY25 will push leverage metrics further beyond comfortable territory.

• Cash conversion deterioration needs explaining. Despite EBITDA of $9.2m, operating cash flow was only $3.4m. Working capital released $7.2m through receivable and inventory run-down, so underlying EBITDA-to-cash conversion was far weaker than the headline suggests. Interest payments on the debt load are the most likely mechanical explanation, but the filing does not provide a full reconciliation from EBITDA to operating cash flow.

• Australia is now the earnings engine. Australian segment result margin improved to ~12.9% from ~10.7% on flat revenue, while New Zealand — despite an improved segment margin of ~5.4% from 3.7% — is still the lower-return, higher-volume drag. A further deterioration in New Zealand volumes would disproportionately compress group EBITDA given New Zealand's 62% revenue share.

Expectations

No formal FY25 guidance was provided. MPG noted the HY25 result was "in line with what we presented at the AGM," suggesting internal expectations were met, but no external earnings target was disclosed.

The FY24 shape is a cautionary reference point: HY24 contributed 134% of FY24's full-year EBITDA, meaning the second half of FY24 produced a deeply negative EBITDA of approximately -$4.2m. If a similar pattern repeats in FY25, the full-year result would be considerably weaker than the HY25 run-rate implies. Annualised HY25 revenue of $228.1m is already running about 4.7% below FY24's $239.3m.

MPG's commentary frames the revenue decline as broadly market-driven rather than share-loss driven — management claims its revenue drop is proportionally smaller than the sector, which, if accurate, is a minor relative positive. However, without forward work or order book data, this claim cannot be independently verified from the disclosed material.

The company flagged it is "looking at capital raising and other alternatives to reduce debt," which remains open. The balance sheet requires resolution before a sustainable earnings recovery can be assessed.

Quality of result

The apparent improvement in NPAT (loss of $5.0m versus $9.2m) is largely a prior-period comparison effect from the $9.1m impairment in HY24. Stripping that out, the operating result deteriorated.

The EBITDA of $9.2m is pre-significant-items, which is appropriate management disclosure but means the statutory earnings picture is worse. Cash conversion of 36.6% suggests a large gap between reported EBITDA and economic earnings; with interest costs on $64.6m of gross debt at current rates likely absorbing $3–4m per half, the business is generating very little discretionary cash.

Working capital release supported the modest positive operating cash flow, but trade debtors and inventories have already reduced alongside the revenue decline, limiting further natural releases in HY26 absent another revenue step-down.

Capital expenditure was very light at $1.5m (1.3% of revenue), suggesting the business is in capital preservation mode. Sustainably low capex may defer maintenance and renewal requirements, creating a deferred cost risk that is not visible in current period numbers.

The one genuine positive is Australia: flat revenue with improved margins indicates operational execution in that segment is holding, and it provides a partial earnings floor for the group.

Unresolved

• What are the specific debt covenant conditions and headroom? With net debt-to-EBITDA at approximately 6x, any covenant tested at 4–5x would be a live concern, yet covenant detail was not disclosed.
• What is the structure, pricing, and maturity of the $64.6m in interest-bearing liabilities? The split between current and non-current borrowings is referenced but not fully analysed here.
• What form will the capital raising or debt-reduction alternative take, and on what timeline? The FY24 annual report flagged this intent; HY25 provides no resolution.
• Is the EBITDA seasonality pattern from FY24 (very weak second half) expected to repeat in FY25, or has the cost base been restructured sufficiently to produce a more even split?
• What is the revenue trajectory in New Zealand — is the market decline stabilising, and what is the exposure to new residential consents leading indicators?

This briefing cannot assess MPG's debt covenant compliance position or the probability, dilution, or quantum of any capital raise under consideration.

Key metrics

Segment breakdown

Analytical metrics

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This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.