- 011Q27 earnings improve after difficult FY26.
- 02Restructuring, cost cuts and asset use aid recovery.
- 03FY27 outlook positive, with risks.
DGL Group (ASX: DGL) has reported a material improvement in first-quarter earnings as the chemicals and logistics operator works to restore profitability following a difficult 2026 financial year.
The (EBIT) improvement during the first three months of FY27 follows operational restructuring, cost reductions, and greater utilisation of expanded facilities.
The company recorded FY26 revenue of $457.9 million, down 4.8%, while underlying EBITDA declined 20.7% to $41.3m.
DGL also reported a statutory after-tax loss of $40.2m, but generated $15.8m in operating cash flow and maintained operating cash conversion of 100%.
The group remains positive about FY27 trading while cautioning that economic and geopolitical conditions continue to present risks to its recovery.
Operational Reset Underway
Manufacturing and logistics revenue increased during FY26, although the closure and subsequent sale of the Victorian battery recycling facility contributed to a sharp decline in environmental revenue.
Higher raw material and fuel costs, increased international freight rates, cheaper imported chemical products, and transport subcontracting associated with driver shortages compressed margins.
Investments in additional warehouse and manufacturing capacity also weighed on earnings while newly expanded facilities operated below their intended utilisation levels.
DGL has responded by selling its Laverton lead recycling operations, reducing costs at Unanderra, and consolidating its premises, business systems, and support functions.
The group is integrating operations and replacing more than 30 existing systems through investments in enterprise resource planning, payroll, and logistics technology to reduce administration costs and improve productivity.
Expanded Asset Base
Manufacturing revenue reached $276.5m in FY26, while logistics generated $151.8m as warehouse storage capacity expanded 20% to more than 120,000 tonnes across the network.
Environmental revenue declined to $29.6m, reflecting the reduced contribution after the closure of the Victorian battery recycling facility.
New manufacturing capacity includes facilities and equipment in Queensland, Victoria, South Australia, and New South Wales, with management prioritising higher throughput rather than further acquisitions.
At the New South Wales liquid waste treatment plant, physical works are targeted for completion in December, with higher volumes anticipated in the second half of FY27 subject to commissioning and additional regulatory approvals.
DGL is also pursuing improved fleet utilisation and reduced subcontracting in logistics, while agricultural chemical demand remains strong and automotive operations continue to face solvent price volatility.
Governance Focus and Board Changes
The company acknowledged that past acquisitions and their integration had not delivered expected returns, with the board placing greater emphasis on internal controls, governance, and financial reporting following an earlier share trading suspension.
Founder and chief executive officer Simon Henry voluntarily proposed reducing his annual salary from $700,000 to $150,000, while directors recognised shareholder dissatisfaction reflected in proxy votes against the remuneration report.
Following the annual general meeting, shareholders approved Warren Inwood and Dean Oehlmann as directors, replacing independent chair Tim Hosking and director John West, who did not seek re-election, while Liz Smith resigned at the meeting’s conclusion.
“Their appointments represent an important step in strengthening the Board’s industry expertise as we continue to focus on operational performance, financial discipline and delivering sustainable long-term value for shareholders,” Mr Simon Henry said.
“I look forward to working closely with Warren and Dean as we build on the foundations established across the group and position DGL for its next phase of development.”
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