Codan’s Aggressive Growth Strategy Tests Integration and Market Risks
Codan Limited reported a robust FY25 with 22% revenue growth to $674.2 million and a 27% jump in net profit, driven by organic expansion and strategic acquisitions. The company’s communications and metal detection segments both posted solid gains, setting a confident tone for FY26.
- FY25 revenue rises 22% to $674.2 million
- Net profit after tax up 27% to $103.5 million
- Communications segment revenue grows 26%, boosted by defence and Kägwerks acquisition
- Minelab segment revenue increases 16%, led by strong African demand
- R&D investment hits $69 million, about 10% of revenue
Strong Financial Momentum
Codan Limited delivered a compelling FY25 performance, with group revenue climbing 22% to $674.2 million and net profit after tax surging 27% to $103.5 million. This growth was underpinned by both organic expansion and the strategic acquisition of Kägwerks, which contributed approximately $24 million in revenue during its first seven months within the group.
Profitability metrics also improved markedly, with EBIT rising 28% to $146 million and net profit margins expanding to 15.3% of sales. The company absorbed $5 million in one-off acquisition-related costs but still managed to enhance operating leverage, particularly in its communications segment.
Communications and Defence Driving Growth
The communications division, accounting for 62% of group revenue, posted a 26% increase to $413.5 million. This was fueled by strong demand from defence customers, now representing 38% of communications revenue, and the integration of Kägwerks, which bolstered Codan’s soldier systems and tactical networking capabilities. The division’s orderbook expanded 28% year-on-year to $253 million, providing a solid revenue foundation heading into FY26.
Within communications, DTC stood out with exceptional growth, particularly in defence-related unmanned systems revenue, which more than doubled to around $100 million. Zetron also contributed with steady growth in EMEA and Asia Pacific, despite some US government funding delays impacting near-term momentum.
Metal Detection Segment Strength
Minelab, Codan’s metal detection arm, grew revenue by 16% to $254.8 million, driven largely by a 54% increase in African sales. The segment’s profit margin improved to 39%, reflecting a favorable product mix with a higher proportion of gold detectors. Minelab continues to expand its market reach with new product launches planned for FY26 and ongoing retail expansion in North America and Europe.
Investment and Balance Sheet Discipline
Codan invested $69 million in research and development, representing roughly 10% of revenue, with a strong focus on communications technologies. The company maintained a conservative balance sheet, with net debt-to-EBITDA below 0.5 times and an increased $250 million bank facility to support future growth and acquisitions.
Cash flow generation was robust in the second half of FY25, enabling a $45.8 million reduction in net debt despite $35.7 million spent on acquisitions. Working capital management also improved, supporting operational flexibility.
Outlook and Strategic Priorities
Looking ahead, Codan expects continued momentum with FY26 communications revenue forecast to grow 15-20%, supported by a strong orderbook and increased defence spending. Minelab plans to launch four new products, capitalizing on favorable macroeconomic conditions in key markets such as West Africa.
Strategically, Codan aims to integrate acquisitions like Kägwerks fully, expand market share in public safety, and enhance its product suite with next-generation technologies. The company also emphasizes building a sustainable, diversified business with predictable recurring revenues.
Bottom Line?
Codan’s FY25 results and strategic investments position it well for sustained growth amid evolving defence and detection markets.
Questions in the middle?
- How will Codan manage integration risks with recent acquisitions like Kägwerks?
- What impact will US government funding delays have on Zetron’s near-term growth?
- Can Codan sustain its high R&D investment while maintaining margin expansion?
