How Did SGH Achieve 8% EBIT Growth and 49% Cash Flow Surge in FY25?

Strong Earnings Growth Amid Mixed Market Conditions

SGH Ltd, a leading Australian diversified industrial services company, has released its FY25 investor presentation revealing a steady financial performance despite challenging market dynamics. The company posted a modest 1% increase in revenue to $10.7 billion, driven by resilient demand across its core businesses. Earnings before interest and tax (EBIT) rose 8% to $1.54 billion, reflecting margin expansion particularly at Boral and WesTrac.

Underlying net profit after tax (NPAT) grew 9% to $924 million, signaling effective operational execution and cost control. Statutory NPAT also improved by 5% to $486 million, despite some impairments in equity accounted investments. The company’s disciplined capital allocation and focus on operational efficiency were evident in these results.

Operational Highlights and Segment Performance

WesTrac, SGH’s authorised Caterpillar dealer in Western Australia and New South Wales, delivered 4% revenue growth to $6.1 billion, supported by strong capital sales and stable service revenues. Although EBIT margin slightly contracted due to pricing pressures on parts, the business maintained robust cash conversion and improved inventory management.

Boral, Australia’s largest integrated construction materials supplier, posted a 1% revenue increase to $3.6 billion and a notable 26% EBIT uplift to $468 million. This was driven by pricing traction and ongoing efficiency initiatives, with margin expansion of 255 basis points. The outlook for Boral remains positive, supported by steady infrastructure demand and anticipated residential market recovery.

Coates, the country’s largest equipment hire company, faced a 9% revenue decline to $1.04 billion amid mixed market conditions but maintained a competitive EBIT margin of 27.8%. The business continues to focus on cost discipline, fleet optimisation, and growth initiatives targeting infrastructure and renewables sectors.

Energy and Media Investments Bolster Portfolio

SGH’s energy segment, including a 30% stake in Beach Energy and full ownership of SGH Energy, showed strong momentum. Beach Energy’s production rose 9% with revenue up 13%, underpinned by higher realised prices and operational efficiencies. The Crux LNG backfill project and Longtom gas field development are progressing, positioning SGH well in the transitional energy market.

In media, SGH holds a 40% share in Seven West Media, which remains Australia’s leading TV network. Despite a 4% revenue decline aligned with advertising market trends, digital growth accelerated with 7plus streaming revenue up 26% and active users increasing 27%. The media business targets EBITDA growth above consensus in FY26.

Financial Strength and Future Outlook

Operating cash flow surged 49% to $1.95 billion, reflecting strong earnings quality and working capital management. SGH reduced its net debt by 3% to $4.2 billion, lowering leverage below 2x EBITDA, which enhances financial flexibility. The company extended key corporate facilities, securing liquidity of $1.9 billion and locking in favorable borrowing costs.

Looking ahead, SGH projects low to mid single-digit EBIT growth for FY26, driven by continued momentum at Boral, stable WesTrac services growth, and medium-term opportunities at Coates. The company’s disciplined operating model, focused on cadence, sales effectiveness, operating leverage, and innovation, underpins its confidence in delivering sustainable value.