Table of Contents
What changed
Revenue grew 11% to NZ$183.5m and NPAT rose 20% to NZ$28.9m, both accelerating from HY25's 5% and 12% respective growth rates. PBT increased 17.9% to NZ$39.0m, consistent with the NPAT move; a modest easing in the effective tax rate from 27.0% to 25.9% provided a small additional tailwind to NPAT.
Segment contributions were both positive. Agri grew faster—revenue up 21% to NZ$61.4m—and lifted its share of disclosed segment revenue by about 3 percentage points to roughly one-third of the total. Industrial, the larger segment at two-thirds of revenue, grew 6% to NZ$122.6m and improved its operating margin modestly to around 20.5% from 19.4%. Agri's margin edged slightly lower to about 30.2% from 30.7%, diluting but not offsetting the volume-driven gain.
Operating cash flow rose 20% to NZ$38.8m, ahead of NPAT. Cash on hand increased to NZ$24.5m and net debt fell to approximately NZ$17.5m despite gross borrowings rising to NZ$42.0m. Capex roughly doubled to NZ$8.9m (4.8% of revenue versus 2.8% in HY25), compressing pre-lease free cash flow to NZ$29.9m from a conversion perspective, though that figure still covered the increased interim dividend.
The interim dividend was lifted to 10.0 cents per share from 9.0 cents, an 11% increase consistent with the earnings growth rate.
What matters
Working capital improvement is the clearest quality signal in this result. Receivable days fell from 56 to 50 and inventory days fell from 94 to 82, freeing up roughly NZ$3.4m of partial operating working capital. This drove cash conversion ahead of profit rather than behind it—an improvement relative to FY25, when management explicitly flagged working capital investment as the reason operating cash flow fell 6% despite record earnings. The reversal here is meaningful.
The Agri acceleration warrants attention as a margin watch item. Agri grew twice as fast as Industrial in this half and added revenue share, but did so at a slightly lower margin. If Agri continues to be the growth driver, the mix headwind on group margins could gradually accumulate. The current half is too short a sample to draw a trend, but the directional risk is worth monitoring.
Capex doubling is the main balance sheet development to track. At NZ$8.9m in a single half, capex is running at nearly twice the HY25 rate. The release does not specify the project mix. If this reflects a deliberate capacity or capability investment cycle, free cash flow will remain lower even as earnings grow. If it is lumpy project timing, the comparison base normalises in coming periods.
Expectations
Management lifted FY26 NPAT guidance to NZ$57m–NZ$62m, up from the prior implicit run-rate. HY26 NPAT of NZ$28.9m annualises to approximately NZ$57.9m, which sits near the lower end of that range. The historical seasonality pattern is mildly second-half weighted: in FY25, H2 contributed about 55.7% of full-year NPAT, implying an H2 that is structurally stronger than H1. On that basis the guidance range is achievable if the seasonal pattern holds, but the annualised run-rate leaves limited buffer against any H2 softness.
Revenue annualised from HY26 implies approximately NZ$367m, roughly 3.8% above FY25 revenue. That is a more modest implied full-year acceleration than the 11% H1 growth rate, which is consistent with the typical shape of the business but should be read as a moderating assumption rather than a forecast.
No forward work or order book balance was disclosed in the materials, so there is no visibility into whether the H1 growth reflects pull-forward demand or durable momentum.
Quality of result
This result has several features that support durability. Cash conversion ran ahead of NPAT for the period, working capital improved rather than absorbed cash, and the effective tax rate move was small and in a favourable direction rather than the result of a one-off credit. No non-recurring items were identified in the filing. Both segments contributed positively and the operating leverage on an 11% revenue increase to 20% NPAT growth is consistent with a modestly geared but not stretched cost base.
The main timing or structural question is Agri's outperformance. Agri has meaningful seasonal drivers—dairy cow milking liner demand, irrigation, and agricultural end markets—and a 21% revenue increase in a single half could partly reflect restocking or seasonal timing rather than a sustained step-change in underlying demand. Without further disclosure on order patterns or channel inventory, this cannot be resolved from the filing alone.
Capex doubling also introduces a forward free-cash-flow dependency on the nature of those investments paying through in future periods. At current levels, FCF-to-NPAT conversion would continue to decline if capex remains elevated, even with stable earnings growth.
Unresolved
- The capex doubling to NZ$8.9m is not explained in the supplied materials; the nature, timeline, and return expectation for these investments are unknown.
- Agri's 21% revenue growth is not segmented by geography or product line, making it difficult to assess how much reflects structural demand recovery versus seasonal or inventory restocking dynamics.
- No order book or forward-work balance was disclosed, so there is no external check on whether H2 is tracking to the guidance range.
- Geographic concentration and FX sensitivity beyond a NZ$0.9m translation line are not quantified, leaving the earnings sensitivity to NZD moves unassessed.
- Gross borrowings rose to NZ$42.0m even as net debt fell; the purpose of additional facility drawdown alongside a strong cash position is not explained.
This briefing cannot assess the probability of achieving the upper end of the NZ$57m–NZ$62m guidance range without forward-work data or management commentary on H2 demand conditions.
Key metrics
| Metric | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | $183.5m | $165.3m | +11.0% ↑ |
| Net profit after tax | $28.9m | $24.2m | +19.6% ↑ |
| Net cash inflow from operating activities | $38.8m | $32.2m | +20.2% ↑ |
| Interim dividend per share | 10.0c | 9.0c | +11.1% ↑ |
| Operating profit | $40.6m | $35.0m | +15.9% ↑ |
| Profit before tax | $39.0m | $33.1m | +17.9% ↑ |
| Cash and cash equivalents | $24.5m | $18.6m | +31.8% ↑ |
| Total assets | $360.6m | $346.1m | +4.2% ↑ |
Source: annolyse.ai/briefings/skl-hy26
Segment breakdown
| Segment | Current revenue | Prior revenue | Current result | Mix shift |
|---|---|---|---|---|
| Agri | $61.4m | $50.5m | $18.5m | +2.9pp |
| Industrial | $122.6m | $115.4m | $25.1m | -2.9pp |
Source: annolyse.ai/briefings/skl-hy26
Analytical metrics
| Metric | HY26 | HY25 | Context |
|---|---|---|---|
| PBT growth | +17.9% | — | — |
| Effective tax rate | 25.9% | 27.0% | — |
| FCF pre-lease | $29.9m | $27.5m | +$2.4m |
| FCF / NPAT | 103.4% | 113.9% | complementary conversion metric |
| Capex % revenue | 4.8% | 2.8% | — |
| Capex | $8.9m | $4.7m | +$4.2m |
| Debtor days | 50.0 | 55.6 | -5.7 days |
| Inventory days | 81.8 | 94.4 | -12.5 days |
| Operating working capital | $132.8m | $136.3m | −$3.4m absorbed |
| Trade debtors | $50.4m | $50.5m | −$0.2m |
| Net debt | $17.5m | $20.4m | −$2.9m |
| Gross borrowings | $42.0m | $39.0m | +$3.0m |
| Payout ratio vs NPAT | 67.8% | — | — |
| Payout ratio vs FCF pre-lease | 65.6% | — | covered |
| ROE (annualised) | 12.0% | 10.6% | Strengthening |
| HY25 share of FY25 revenue | 46.8% | — | Other half was 53.2% |
| HY25 share of FY25 NPAT | 44.3% | — | Other half was 55.7% |
| Profit from continuing operations | $28.9m | $24.2m | +$4.7m |
Source: annolyse.ai/briefings/skl-hy26
This analysis was generated using Annolyse, an AI-powered tool that extracts and analyses NZX/ASX company announcements. The underlying data is extracted from official company filings and verified against source documents. 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.