HY25 PBT jumped 49% as leverage fell to 0.8x, but operating cash outflow widened

What changed

Revenue rose 16.9% to NZ$371.9m, with profit before tax up 49.1% to NZ$72.7m and EBITDA up 42.8% to NZ$87.8m. Reported NPAT of NZ$48.6m was 72.6% higher, helped by a slightly lower effective tax rate of 20.8% versus 22.0%. The mix shift is the story underneath: Horticulture revenue climbed from NZ$134.5m to NZ$193.8m and now represents 52.1% of group revenue (up from 42.3%), while Global Proteins revenue declined from NZ$141.7m to NZ$126.4m, dropping its share from 44.6% to 34.0%. Horticulture segment margin expanded to about 21.0% from 16.6%, and Global Proteins margin rose to about 24.6% from 19.8% despite the lower revenue. Net debt improved to NZ$67.5m (0.77x EBITDA) from NZ$81.9m (1.33x), with gross borrowings down 8.1% and cash up to NZ$44.4m. Operating cash flow worsened to a NZ$9.2m outflow from a NZ$2.6m outflow in HY24.

What matters

• Earnings quality is genuine at the PBT line. The 49.1% PBT lift is supported by segment-level margin expansion in all three operating segments, not by a one-off or tax effect. The NPAT/PBT growth gap of 23.5 percentage points is explained almost entirely by the modestly lower effective tax rate.
• Deleveraging accelerated despite weaker operating cash. Net debt/EBITDA nearly halved, driven by EBITDA expansion and NZ$9.9m lower gross borrowings, not by cash generation. Capex fell sharply to NZ$9.7m from NZ$44.5m (2.6% of revenue versus 14.0%), which is the real free-cash lever this half.
• Cash conversion deteriorated. OCF-to-EBITDA fell to –10.5% from –4.2%. With inventory days dropping from 22.8 to 15.0, the working-capital release was not the problem; the cash outflow widened despite a leaner inventory position, which sits uncomfortably against a 43% EBITDA uplift.

Expectations

The release carries a "Profit Guidance" heading and signals "a further lift in FY25", but no numerical FY25 target was included in the supplied excerpts. Shape context is unusual: HY24 represented 54.4% of FY24 revenue, 67.0% of FY24 EBITDA, and 91.6% of FY24 NPAT — so the FY24 second half delivered only NZ$2.6m of NPAT on NZ$266.5m of revenue. Annualising HY25 revenue gives roughly NZ$743.8m, about 27% above FY24, but applying the FY24 seasonal weighting would imply a materially smaller second half. The release supports a strong full-year uplift, but the supplied materials do not anchor the magnitude of any second-half step-down.

Quality of result

Much of the earnings improvement looks durable: it is broad-based across segments, supported by margin expansion rather than one-offs, and accompanied by a cleaner balance sheet. However, three caveats qualify the quality read. First, operating cash flow was negative and worse than prior, so the earnings uplift has not yet translated to cash — pre-lease free cash flow remained a NZ$18.9m outflow even after the much lower capex. Second, management reports Underlying EBITDA of NZ$86.7m and Underlying NPATAS of NZ$48.9m alongside a "Reported NPAT" figure in the narrative of NZ$57.6m, which differs from the NZ$48.6m in the statutory accounts; the supplied materials do not reconcile these non-GAAP measures. Third, the step-down in capex intensity (from 14.0% to 2.6% of revenue) flatters the free-cash picture this half and is unlikely to be a steady-state rate.

Unresolved

• What is the bridge between statutory NPAT of NZ$48.6m and the headline "Reported NPAT" of NZ$57.6m, and between statutory EBITDA of NZ$87.8m and Underlying EBITDA of NZ$86.7m?
• What drove the wider operating cash outflow despite a 43% EBITDA lift and a NZ$9.2m inventory reduction — specifically the payables and biological-asset movements not disclosed here?
• Is the capex step-down a completion of a prior build-out or a deferral, and what is the expected FY25 run-rate?
• What are the segment-specific drivers behind Horticulture's revenue surge and Global Proteins' revenue decline with margin expansion — volume, price, or FX?
• Is the FY25 profit guidance quantified in the full release, and what seasonality assumption underpins it given HY24's 91.6% share of FY24 NPAT?

This briefing cannot assess valuation, dividend policy for the period, or the specific composition of the underlying earnings adjustments because those items were not included in the supplied extraction.

Key metrics

Segment breakdown

Analytical metrics

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.