GWA Group (ASX:GWA) management told investors its first-half performance to Dec. 31, 2025 delivered “a resilient result” despite what it described as a demanding market environment, with volume, revenue, and earnings growth supported by its customer-first strategy and focus on profitable volume growth.
Managing Director and CEO Urs Meyerhans said the company’s “Win the Plumber” initiative remained its top strategic priority and continued to gain traction during the half. He highlighted more than 11,000 technical interactions with plumbers, up from 7,300 in the prior comparable first half, which management said contributed to a 6% increase in sales of plumber bundles and spares. Meyerhans also pointed to on-time delivery performance above 90% across markets and an improving customer Net Promoter Score.
Half-year financial results and significant items
Scott said group revenue rose 2% on the prior period, reflecting sales and volume growth “across all markets.” By geography, management cited:
- Australia: Volume up 4.8% and sales growth of 2%.
- New Zealand: Revenue up 1% (or 2.4% in local currency) and volume up 11%.
- United Kingdom: Sales up 7% (or 2.2% in local currency) and volume up 4.9%.
Normalized EBIT increased 3%, which Scott attributed to operating leverage and “continued cost discipline.” He said the group achieved a slightly improved EBIT margin, with normalized EBIT margin up 0.2 percentage points to 18.5%. With significantly lower significant items than the prior period, statutory EBIT rose 11% and statutory net profit after tax increased 14.9%, according to management.
In a discussion of earnings drivers, Scott said the company experienced pricing pressure and an “anticipated mix shift” linked to higher sales of product ranges targeted at multi-residential and volume home builders. He also referenced a small foreign exchange impact, noting the average AUD/USD exchange rate of 0.65 during the half compared with 0.66 a year earlier, affecting stock purchases and balance sheet revaluations.
Cash flow, balance sheet, and dividend
Management said cash generation remained strong, with a cash conversion ratio of 92% for the half. Scott reported operating cash flow of AUD 43.6 billion for the period and said the change in working capital reflected a planned increase in inventory ahead of Chinese New Year in February and March 2026. In the Q&A, management quantified the inventory build at around AUD 5 million to AUD 6 million and said it was expected to unwind in the second half.
Capital expenditure was AUD 1.7 billion, in line with the prior period, with full-year CapEx expected to be AUD 4 million to AUD 5 million, focused on growth initiatives and cost efficiency, Scott said.
GWA declared an interim dividend of AUD 0.08 per share, fully franked, up 6.7% from the prior half, with payment scheduled for March 9, 2026. Scott said net debt at Dec. 31, 2025 was AUD 96.4 million, up from AUD 85.1 million at June 30, which he attributed to the company’s share buyback. Management said leverage was 1.2x and gearing was 20.1%, with total bank facilities of AUD 205 million and headroom of AUD 109 million.
Market performance: Australia, New Zealand, and the UK
Group Executive Sales Craig Norwell said Australia remained the largest market, representing 83% of group revenue. He said sales and volume growth continued in Australia, supported by the company’s localized sales force and emphasis on plumbers and renovation and replacement activity, with New South Wales returning to growth during the half after a reset of the go-to-market plan.
Norwell said Victoria and Queensland “lapped” strong prior corresponding halves, including two major hospital contracts in Victoria. He described early signs of improvement in Victoria across renovation and replacement, plumbers, and residential, while in Queensland growth in merchant, renovation and replacement, and plumbers was offset by weakness in commercial and residential sectors.
Norwell also highlighted stronger results in Western Australia, where sales rose 9%, and in South Australia, where sales increased 6%, driven by merchant, renovation and replacement, and plumbers. He said the overall merchant segment delivered 8.2% sales growth, with growth achieved with two of the company’s top four merchant partners, and added that GWA had a “solid pipeline” of multi-residential opportunities.
In New Zealand, Norwell said revenue was slightly ahead and up 2.4% in local currency terms, which he said helped stem the recent decline. He added the company simplified and “right-sized” operations to align with market conditions and refreshed its Methven product range. In the UK, he said sales growth reflected sustained gains with new customers.
Product innovation and AI-enabled leak detection pilot
Meyerhans said new product development (NPD) remained a core focus, with launches targeting residential and care markets. He cited multiple product actions during the half, including the launch of the Methven Micro Two range in New Zealand; expansion of the Liano range into showers and accessories; extension of entry-level ranges into new product types; and expansion of heated towel rail products.
Management also outlined a new pilot program built around “Smart Command” capabilities: an AI-enabled leak detection and protection solution for the residential sector. Meyerhans said the company partnered with Phyn, describing it as a global category leader in AI-enabled leak protection. He said the system monitors for leaks, alerts homeowners in real time, and can automatically shut off water supply, while also tracking water use at fixture level through an app.
According to Meyerhans, GWA has an exclusive partnership with Phyn for the ASX market for this product, with the pilot underway. He said the company expects an initial investment of AUD 0.5 million to AUD 2 million in the second half of fiscal 2026 to support the pilot and related market entry activities.
Outlook and Q&A: pricing, FX, and demand conditions
Looking ahead to fiscal 2026, Meyerhans said demand conditions were expected to remain mixed in Australia and New Zealand, while UK conditions were “challenging,” citing declining lead indicators in building construction. In Australia, he said commercial markets were expected to be broadly stable, with strength in education and aged care potentially offset by continued softness in office new build. He said residential detached and multi-residential activity were forecast to increase from late fiscal 2026, while repair and renovation demand remained tempered by cost-of-living pressures and weaker consumer confidence following a recent interest rate increase.
During Q&A, management addressed competitive pricing pressures, saying pressure was visible in some categories but not broad-based and had not materially impacted margins, with gross profit margins “held very consistent” through cost management. Management also clarified it had announced price increases in the UK and New Zealand, scheduled for March and April, while it continued reviewing Australian pricing in light of cost profiles and the exchange rate. On foreign exchange, management said it planned to continue its existing hedging program and did not see a need to make fundamental changes.
When asked about changes at the customer level, including private label dynamics, management said it had not seen material changes and reiterated that its strategy was built around driving “pull” through end-user engagement, particularly via plumbers and renovation and replacement activity, while maintaining central merchant relationships.
About GWA Group (ASX:GWA)
GWA Group Limited researches, designs, manufactures, imports, and markets building fixtures and fittings to residential and commercial premises in Australia, New Zealand, and internationally. It offers vitreous China toilet suites, basins, plastic cisterns, taps and showers, baths, kitchen sinks, laundry tubs, smart products, and bathroom accessories, as well as domestic water control valves under the Caroma, Methven, Dorf, and Clark brands. The company also distributes and installs various products through a range of distribution and customer channels.
