NPAT up 16.6% but capex surge pushes dividend above free cash flow

EBITDA was up 7.1% to $122.4m, so margin compressed slightly as costs grew faster than the top line below the EBITDA mark.

Operating cash flow rose only 5.8% to $77.8m while capex jumped 54.1% to $25.2m, lifting capex intensity from 7.3% to 10.3% of revenue. Free cash flow pre-lease fell to $52.6m from $57.2m. The interim dividend was raised 14.3% to 8.0 cents.

Net debt sits at $471.2m, up from $450.3m, but net debt/EBITDA improved marginally to 3.85x (from 3.94x) because EBITDA grew faster than borrowings.

The interim payout sits at 125.4% of FCF pre-lease, versus 82.8% in the prior comparable, even though the NPAT payout ratio fell slightly to 76.9% (from 78.7%). The cause is the capex step-up rather than weaker earnings, but the implication is that any further dividend lifts depend on second-half cash generation and the durability of capex normalising.

Capex intensity has stepped up sharply. A 54.1% increase in capex against 8.5% revenue growth is a deliberate investment posture, not a maintenance number. For a port operator this is not unusual through expansion cycles, but it does mean reported NPAT growth materially overstates near-term cash returns to shareholders this half.

Underlying earnings growth was clean. The 16.6pp PBT/NPAT growth gap was zero, the effective tax rate barely moved (26.5% versus 26.6%), and there is no disclosed one-off in the current period. So the headline 16.6% NPAT lift reflects operating performance, not tax or below-the-line distortion.

On a like-for-like operating base, annualising current-half revenue gives $488.3m. Management states earnings guidance has been raised, but no specific FY26 NPAT or EBITDA target is supplied in the materials, so the gap to a stated number cannot be measured.

The selection diagnostics flag the prior comparable as a fallback driven by a period-shape change in how HY25 was tagged; the underlying HY25 figures used here are the genuine six-month numbers, so the percentage comparisons are economically like-for-like.

Revenue growth and PBT growth are both supported by the income statement, the tax rate is stable, and there is no evidence the result was assisted by working capital release — receivables aren't separately disclosed in the current half but operating working capital moved only $0.2m and inventory days were broadly flat.

The cash quality is weaker than the earnings line suggests. OCF/EBITDA edged down to 63.6% from 64.3%, FCF/NPAT fell to 74.9% from 95.1%, and FCF pre-lease declined in absolute dollars. None of this reflects accrual quality issues; it is the capex step-up flowing through. The implication for someone reading the result is that the 16.6% NPAT growth and the 14.3% dividend increase rest, this half, on the balance sheet absorbing higher investment rather than internally generated free cash, with leverage held in check only because EBITDA grew.

This briefing cannot assess full-year guidance shape, longer-term capex programme details, or trade-volume mix economics because none of those are quantified in the supplied materials.