Reece Faces Earnings Pressure and Market Headwinds Amid Strategic Board Refresh

FY25 Financial Performance Amid Market Challenges

Reece Limited, a leading distributor in plumbing and HVAC-R products across Australia, New Zealand, and the United States, delivered its 2025 Annual General Meeting addresses outlining a year marked by economic headwinds and competitive pressures. The company reported a slight 1% decline in group sales to $9 billion, with EBITDA falling 11% to $901 million and EBIT down 20% to $548 million. These results reflect softness in end markets, particularly in the US residential new construction sector, and increased competition.

Despite these setbacks, Reece’s leadership emphasized the resilience of its business model and the strength of its long-term strategic priorities. The company’s 2030 vision remains focused on becoming the trade’s most valuable partner through operational excellence, innovation acceleration, and profitable growth investments.

Capital Management and Shareholder Returns

In a clear signal of confidence and commitment to shareholder value, Reece executed a $365 million off-market share buyback, repurchasing approximately 4.3% of shares on issue. This move balanced returning excess capital to shareholders while maintaining a robust balance sheet and preserving flexibility for future growth initiatives. The Board declared a final dividend of 11.86 cents per share, bringing the total FY25 dividend to 18.36 cents, fully franked.

Board Renewal and Governance Enhancements

Reece’s governance saw significant evolution during the year, with the retirement of long-serving directors and the appointment of new independent members, including former ASX50 executive Jacqueline Chow. This reshaping aims to blend continuity from the company’s unique founder-led ownership with fresh expertise to navigate the next growth phase. The Board is actively searching for a Lead Independent Director to strengthen minority shareholder representation.

Following a ‘first strike’ on its remuneration report last year, Reece has enhanced transparency and alignment in its remuneration framework. Measures include expanded benchmarking disclosures, minimum shareholding requirements for key personnel, and annual director elections, underscoring the company’s commitment to fair and competitive governance practices.

Q1 FY26 Trading Update – Growth Amid Cost Pressures

Early trading in FY26 shows encouraging signs with group sales rising 8%, driven primarily by network expansion, 15 new branches opened across Australia, New Zealand, and the US. Like-for-like sales increased 2%, despite ongoing macroeconomic challenges and competitive dynamics. However, EBIT declined 18% due to elevated depreciation and amortisation costs linked to recent investments and higher labour expenses.

Reece’s leadership remains confident that these investments, made through the cycle, will position the company strongly when market conditions improve. The focus on operational excellence and innovation continues to underpin the company’s strategy to deliver long-term value for customers and shareholders alike.