GWA Group Lifts Profit and Dividend as Volumes Offset Soft Markets

GWA Group (ASX: GWA) increased statutory net profit after tax by 10.6% to $48.0 million in FY26, with revenue rising 0.9% to $422.3m despite softer conditions emerging across key markets in the second half.

Normalised EBIT increased 2.5% to $78.2m as group volumes rose 2.3%, while the normalised EBIT margin improved 0.3 percentage points to 18.5%.

The group declared a fully franked final dividend of 8.5 cents per share, taking the full-year payout to 16.5 cents per share, up 6.5% from the previous financial year.

GWA enters FY27 expecting improving Australian residential completions and continued Multi-Residential growth, although renovation activity and parts of the commercial market remain subdued.

Earnings Hold through Market Softness

Australian revenue increased 0.9% to $353.6m, with growth in New South Wales, Queensland, Western Australia, and South Australia offsetting a 6.3% fall in Victoria.

WA led the state performance with revenue growth of 10.6%, while the broader Australian result was supported by Merchant, Win The Plumber, and Multi-Residential activity as Commercial demand remained subdued.

New Zealand revenue increased 1.3% in Australian dollar terms and 7.1% in local currency, while United Kingdom revenue rose 0.8% and 1.3% respectively despite softer market conditions.

Second-half group revenue fell 2.7% from the first half to $208.2m and normalised EBIT eased 2.5% to $38.6m, but disciplined cost control held the normalised EBIT margin at 18.5%.

Cash Flow from Stock Pull-Forward

Cash conversion fell to 76% after GWA proactively brought forward stock purchases to defer the impact of product cost increases, creating a $23.2m adverse working capital movement during FY26.

Cash flow from operations consequently declined to $71.7m from $101.8m and group free cash flow fell to $25.0m from $54.0m, with GWA expecting the stock pull-forward to reverse in FY27.

The company believes cash conversion will move above its 80% to 85% target range as working capital unwinds, while its final dividend was supported by what it described as a solid financial position.

Net debt rose to $127.9m from $85.1m after the working capital movement and share buyback, while leverage increased to 1.6 times but remained within GWA’s target range of one to two times.

By 30 June, GWA had completed $25m of its planned $30m on-market share buyback and retained $77m of headroom across $205m of banking facilities.

FY27 Outlook Mixed

GWA plans to continue targeting Merchant partnerships, maintenance plumbers, Multi-Residential opportunities, and selected health and aged care projects as it works through a mixed FY27 market backdrop.

The Australian outlook assumes a modest increase in detached residential completions during the first half before stabilisation or decline later in the year, while Multi-Residential completions are expected to keep increasing.

Repair and Renovation activity is expected to remain subdued under cost-of-living and interest-rate pressures, while Commercial activity excluding data centres is expected to be broadly flat as weakness in offices is offset by health care, aged care and education.

GWA implemented an Australian price increase of about 5% from 1 August 2026 and plans a roughly 4% increase in New Zealand from 1 November 2026, while ocean freight costs are expected to create a $3m to $4m full-year headwind against FY26.

Foreign exchange is expected to provide an approximately $3m benefit compared with FY26, with 55% of exposure currently hedged at US$0.69.