NPAT up 16.6% on 8.5% revenue lift, but pre-lease FCF slipped as capex stepped

Comparable note: HY25 was selected on an fallback basis rather than an exact same-period filing match.

What changed

• Revenue rose 8.5% to NZ$244.1m, with reported PBT up 16.6% to NZ$95.6m and NPAT up 16.6% to NZ$70.2m on a stable effective tax rate of about 26.5%.
• Operating cash flow grew only 5.8% to NZ$77.8m, lagging earnings, while capex stepped up sharply to NZ$24.7m from NZ$16.3m (10.1% of revenue versus 7.3%). Pre-lease free cash flow consequently fell to NZ$53.1m from NZ$57.2m.
• Cash on hand rose to NZ$27.5m (from NZ$17.0m), but gross borrowings also rose to NZ$498.7m, leaving net debt higher at NZ$471.2m versus NZ$450.3m a year earlier.
• The interim dividend was lifted 14.3% to 8.0 cps. Segment mix was effectively unchanged, with port operations still ~88.8% of revenue.

Note on comparability: the prior-comparable HY25 figures were sourced via a fallback to the prior interim release, so the period shape match is not perfect, although the headline like-for-like values reconcile.

What matters

• Earnings quality is operationally clean. PBT and NPAT grew at the same 16.6% rate, with effective tax stable around 26.5%. There is no tax distortion or below-the-line driver inflating the headline; the result is genuinely operating-led on an 8.5% revenue lift.
• Cash conversion deteriorated. OCF growth (5.8%) materially lagged PBT/NPAT growth (16.6%), and the step-up in capex pushed pre-lease FCF down 7.2% year on year. FCF-to-NPAT fell to 75.6% from 95.1%.
• Capital return is now ahead of pre-lease FCF. The 8.0 cps interim dividend implies a payout ratio of ~101.7% of pre-lease FCF (versus ~82.8% prior). Coverage on a post-lease basis cannot be computed from the supplied materials, but on the disclosed lines the interim distribution is no longer covered by free cash flow.

Expectations

Management states that earnings guidance was increased, but no numeric FY26 target, backlog, or forward-work figure was disclosed, so this release cannot be benchmarked against a stated quantitative target.

On seasonality, FY25 was second-half-weighted, with HY25 representing 48.4% of full-year revenue, 48.7% of EBITDA, and just 34.7% of NPAT (the FY25 NPAT shape was distorted by a one-off). Annualising HY26 revenue gives ~NZ$488.3m, around 5.1% above FY25's NZ$464.7m. The half-year pattern still points to a stronger second half, particularly on profit, but the FY25 NPAT base contained a one-off that should not recur.

Quality of result

The trading uplift looks durable: 8.5% revenue growth on 1.2% volume growth implies firmer pricing/mix, segment economics are stable, and there are no flagged non-recurring items in HY26. The earnings-to-cash bridge, however, is the soft point. OCF lagged earnings, and the FCF-to-NPAT ratio fell roughly 19 percentage points, so a meaningful share of the reported profit improvement did not convert to cash this half. Net debt is also drifting up despite higher cash on hand. With capex pace running well above prior-year levels, the result is more capex-cycle-driven on the cash side than the P&L line alone suggests.

Unresolved

• HY26 EBITDA was not explicitly disclosed, so the headline EBITDA growth rate, OCF/EBITDA, and net debt/EBITDA cannot be verified for the current period.
• No quantitative FY26 earnings guidance was provided, despite the stated guidance upgrade, so the size of the implied second-half lift is unclear.
• Receivables and inventory disclosures are insufficient to assess working-capital movements, leaving the source of weaker cash conversion (timing versus structural) ambiguous.
• The capex step-up is not broken down in the supplied materials, so it is unclear whether this is a one-half spike or the start of a higher run-rate that would pressure dividend cover further.
• This briefing cannot assess whether the increased earnings guidance and current capital-return pace are mutually sustainable without a disclosed FY26 numeric target or capex outlook.

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.