NPAT +19.4% on Agri-led growth, FY26 NPAT guidance lifted to $57-62m

Revenue rose 11.0% to $183.5m, PBT grew 17.8% to $39.0m and NPAT lifted 19.4% to a record $28.9m. Management raised FY26 NPAT guidance to a $57–62m range (midpoint $59.5m).

The mix carried more of the result than the headline suggests. Agri Division revenue grew to $61.4m (+21.5%) on strong international dairy rubberware demand, lifting Agri's share of group revenue by 2.9pp to 33.5%, while Industrial Division revenue rose a more modest 6.2% to $122.6m. Disclosed segment margins were 30.2% in Agri versus 20.5% in Industrial.

Operating cash flow rose 20.2% to $38.8m, net debt fell to $17.5m from $20.4m, and the interim dividend was lifted to 10.0cps from 9.0cps (+11.1%). Capex stepped up sharply to $8.9m from $4.7m.

PBT growth of 17.8% on revenue growth of 11.0% indicates genuine operating leverage rather than purely volume. The effective tax rate eased to 25.9% from 27.0%, which explains why NPAT growth (+19.4%) ran 1.6pp ahead of PBT. PBT is the cleaner operating read; investors should not extrapolate the full NPAT growth rate without checking the FY26 tax rate.

Agri carried the mix shift. Agri revenue grew roughly three times faster than Industrial and now contributes 33.5% of group revenue at a disclosed 30.2% segment margin, well above Industrial's 20.5%. This means the group's earnings quality is increasingly tied to the international dairy rubberware cycle, which is more cyclical than the Industrial book.

Cash flow was strong but balance-sheet assisted. Inventory days fell 12.6 days to 81.9 and receivable days fell 5.7 days to 50.0, releasing roughly $3.5m of operating working capital. That release sits inside the $38.8m OCF print, so reported cash conversion (OCF/EBITDA 78.5%, FCF/NPAT 103.4%) reflects both the earnings step-up and a working-capital tailwind that will not repeat at the same scale.

To reach the new guidance midpoint of $59.5m, Skellerup needs roughly $30.6m of second-half NPAT, only marginally above the implied $30.4m delivered in 2H25. The top of the range ($62m) would require a $33.1m second half — achievable but not undemanding.

This matters because the guidance lift rests on Agri momentum continuing and Industrial holding margin while capex steps up. The release does not disclose forward-work or order-book metrics, so visibility into the second-half pipeline is limited from this filing alone.

However, two adjustments belong on the read.

First, the working-capital release of approximately $3.5m and the 12.6-day reduction in inventory days drove a material part of the OCF beat. If this reflects normalisation from the FY25 working-capital build (which management previously cited as the reason for last year's OCF dip), it may be one-off rather than a new run-rate. Second, capex almost doubled to $8.9m (4.8% of revenue versus 2.8%), so FCF pre-lease only rose to $29.9m from $27.5m — far less than the +20% OCF growth implies. The dividend (67.8% NPAT payout, 65.6% FCF payout) remains covered, with leverage at a comfortable 0.35x net-debt-to-EBITDA.

This briefing cannot assess segment-level earnings durability beyond disclosed half-year segment results, nor underlying end-market demand signals not contained in the release.