Reece is a leading supplier of plumbing, bathroom, HVAC-R, waterworks, and refrigeration products with a strong market presence in Australia, New Zealand, and the United States, serving a diverse range of clients across trade, retail, commercial and infrastructure.
Reece Group, a holding within the ASX Growth and Discretionary portfolios, has this morning announced it’s latest results ending June 30th 2024, with shares trading -4% lower this morning as investors react to the update.
A leading distributor of plumbing, waterworks, and HVAC-R products, has posted a solid financial performance for the fiscal year ended June 30, 2024, despite facing a challenging market environment. The company reported an 8% increase in net profit after tax, reaching $419.2 million, while total revenue rose by 3% to $9.1 billion
CEO Peter Wilson attributed the results to disciplined execution and a strong focus on core business fundamentals, especially amid a softer trading environment. The company’s adjusted net profit came in at $416 million, in line with analyst expectations.
Regarding regional performance, Reece’s operations in Australia and New Zealand (ANZ) faced headwinds due to subdued housing markets, resulting in flat sales of $3.8 billion. However, cost control measures helped the region achieve a slight increase in adjusted EBITDA to $560 million. The US market fared better, with a 5% increase in sales to $5.3 billion (AUD), bolstered by favourable currency movements. Adjusted EBITDA in the US rose by 9% to $293 million.
Looking ahead, Reece remains cautious, expecting ongoing challenges in both regions amid weaker demand from renovators and approvals for new builds slow. However, the company is optimistic about long-term growth, supported by structural factors driving demand for housing and infrastructure.
Reece has increased its final dividend to 17.75 cents per share, up from 17 cents last year, underscoring its commitment to returning value to shareholders despite the tough market conditions.
Despite the softer share price this morning, the outlook for REH’s is expected to improve into 2025, an overall REH remains a high-quality company, and remains a valid buy recommendation in both the discretionary and ASX Growth portfolios.
