How Emeco’s Strategic Shift Fueled 22% Earnings Growth in FY25
Emeco Holdings reports robust FY25 results marked by solid revenue growth, margin expansion, and significant debt reduction, setting the stage for continued operational focus and moderate earnings growth in FY26.
- 7% revenue growth to $785.4 million driven by core rental and rebuild services
- Operating EBITDA up 7% to $301.1 million; EBIT rises 16% to $145.7 million
- Net leverage reduced to 0.65x from 1.0x, reflecting strong balance sheet management
- No dividend declared as capital management prioritizes debt reduction
- FY26 outlook anticipates moderate earnings growth, strong free cash flow, and further deleveraging
Robust Financial Performance Amid Strategic Refocus
Emeco Holdings Limited (ASX – EHL) has delivered a strong financial performance for the 2025 fiscal year, underscoring the success of its strategic refocus on core mining equipment rental and workshop services. The company reported group revenue of $785.4 million, a 7% increase from the prior year, driven by growth in rental and equipment rebuild operations.
Operating EBITDA rose 7% to $301.1 million, while operating EBIT surged 16% to $145.7 million, reflecting improved operational efficiencies and disciplined cost management. These gains translated into a 22% increase in operating net profit after tax (NPAT) to $84.5 million, with statutory NPAT climbing 43% to $75.1 million.
Margin Expansion and Capital Efficiency
Emeco’s operating EBITDA margin expanded to 38% from 34% in FY24, and EBIT margin improved to 19% from 15%, driven by the exit from lower-margin contracting work and effective contract renewals. Return on capital advanced to 17%, edging closer to the company’s long-term target of 20%, supported by sustained fleet utilisation and capital discipline.
Capital expenditure was tightly controlled, with sustaining capex aligned closely to depreciation, and no growth capex undertaken in FY25. This prudent capital management underpinned a 32% increase in operating free cash flow to $114.3 million and enabled a substantial reduction in net debt by $85.6 million to $194.9 million, lowering net leverage to 0.65x from 1.0x the previous year.
Operational Highlights and Safety
The core rental business remained the backbone of Emeco’s performance, with external rental revenues growing 9% to $615.4 million. Fleet utilisation remained strong at 85% for surface equipment and improved underground utilisation to 57%, supported by new project wins. The Force Workshops division maintained steady revenue and profitability, completing more machine rebuilds than the prior year.
On safety, Emeco reported no fatalities or lost time injuries, though the total recordable injury frequency rate (TRIFR) increased slightly to 3.4 from 2.8, prompting renewed focus on safety compliance and operational discipline.
Technology and Future Outlook
Emeco continued to invest in technology, advancing its Emeco Operating System platform and progressing the implementation of a new Microsoft Dynamics 365 ERP system, expected to roll out in FY26. These initiatives aim to enhance operational efficiency, reduce costs, and improve customer service.
Looking ahead, Emeco expects moderate earnings growth, significant free cash flow generation, and further deleveraging in FY26. The company plans to maintain disciplined capital expenditure, focus on increasing fleet utilisation, and expand its service offerings, including partnerships to support battery-powered equipment. With a strong balance sheet and positive market conditions in mining, Emeco is well positioned to build on its momentum.
Bottom Line?
Emeco’s FY25 results reinforce its strategic pivot and financial discipline, setting a solid foundation for measured growth and continued balance sheet strengthening in FY26.
Questions in the middle?
- How will Emeco’s ERP implementation impact operational efficiency and cost structure in FY26?
- What are the risks to fleet utilisation amid fluctuating mining sector demand?
- When might Emeco resume dividend payments given its capital management priorities?
