This article first appeared on GuruFocus .
-
Sales Revenue:$9.4 billion, up 4.5% year on year.
-
EBITDA:Flat at $901 million.
-
EBIT:Down 2.6% to $534 million.
-
Earnings Per Share:$0.495.
-
Return on Capital:11.9%.
-
Total Dividends:Increased 2.6% to $0.1884 per share, fully franked.
-
ANZ Sales Revenue:Up 8.3%, driven by higher volumes with a 2% inflation contribution.
-
ANZ EBIT:Up 6% to $360 million, with EBIT margin at 8.6%, down 17 basis points year on year.
-
US Sales:Up 6.5% to USD3.5 billion, driven by incremental sales from network expansion with a 2% inflation contribution.
-
US Like-for-Like Sales:Declined 1.7% year on year, with the second half broadly flat.
-
US EBITDA:Declined 5% for the year, with EBITDA margin decreasing 83 basis points.
-
US EBIT:$118 million, down 13%, with EBIT margin contracting 76 basis points.
-
Net Operating Cash Inflows:$645 million for the year.
-
Capital Expenditure:Represented 1.9% of sales, down on the prior year.
-
Gross Interest Expense:$66 million for the year; expected in the range of $60 million to $70 million in FY27.
-
Capital Returned to Shareholders:$401 million through share buybacks.
-
Net Working Capital-to-Sales Ratio:19%, in line with the prior year.
-
Net Debt:Increased to $744 million, with net leverage ratio at 1 times EBITDA, down from 1.5 times at December.
-
New Branches Opened (US):Net 25 new branches during the year, following 24 branches added in FY25.
-
Warning! GuruFocus has detected 8 Warning Signs with ASX:REH.
-
Is ASX:REH fairly valued? Test your thesis with our free DCF calculator.
Release Date: August 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
ANZ sales revenue grew 8.3% in FY26, driven by higher volumes and a solid pipeline of activity supporting first-half FY27 momentum.
-
US network expansion continued with 25 net new branches opened in FY26, and the company plans to open 15-20 new branches per annum.
-
The company maintained a strong in-stock position through supply-chain disruptions, leveraging long-standing supplier partnerships as a competitive advantage.
-
Net leverage ratio improved to 1.0 times EBITDA by year-end, down from 1.5 times at December, reflecting stronger operating cash-flow generation.
-
Total dividends increased 2.6% to $0.1884 per share, fully franked, supported by the share buyback program.
Negative Points
-
Group EBITDA was flat at $901 million, and EBIT declined 2.6% to $534 million, reflecting cost pressures and investment impacts.
-
US like-for-like sales declined 1.7% in FY26, with weak new residential construction continuing to impact demand.
-
US EBIT margin contracted 76 basis points, primarily due to new branches that are still scaling and have not yet reached breakeven.
-
ANZ EBIT margin declined 17 basis points, partly due to a $10 million amortization impact from the Metalflex brand name integration.
-
The outlook for FY27 remains cautious, with US housing recovery timing unclear and consumers highly sensitive to interest rates and affordability challenges.
Q & A Highlights
Q: Peter Steyn (Macquarie) asked about the unfolding of the ANZ environment over the next 12 months, specifically the support from the project pipeline and the outlook for the R&R market. A: Peter Wilson (Executive Chairman and CEO) stated that R&R remains the most resilient part of the business, driven by house prices and housing stock age. He noted a caveat regarding softening house prices and reduced auction clearance rates due to government policy changes. For new residential construction, the company finished the second half with good momentum, expected to continue into the first half, though three interest-rate rises and housing affordability remain risks. He expressed confidence in ANZ for the first half but said it is too early to be overconfident about the second half.
Q: Lee Power (JP Morgan) asked about the strong second-half ANZ sales growth of 13% year-on-year and whether the 2% full-year inflation figure was a sensible starting point for FY27, questioning what volumes actually were. A: Peter Wilson (Executive Chairman and CEO) explained that the inflation figure was impacted by supply-chain shocks, such as the oil shock and PVC price increases, which brought demand forward. He noted the market remains competitive, with cost increases and savings being passed through. He confirmed good momentum in the ANZ business, with all segments performing well, and expressed confidence in the first half, barring external shocks, with an update expected at the AGM.
Q: Brook Campbell-Crawford (Barrenjoey) asked whether the "modest growth" outlook for the US referred to like-for-like sales or fully loaded sales, including benefits from store roll-outs. A: Peter Wilson (Executive Chairman and CEO) clarified that the "modest growth" comment refers to all-in sales growth, reflecting caution about the US market. He reiterated that the company is far from the finished product in the US and remains committed to its multi-decade strategy, with an update to be provided at the AGM.
Q: Harry Saunders (E&P) asked about the pull-forward of demand ahead of price rises in the second half and whether this trend was impacting volumes at the start of FY27. A: Peter Wilson (Executive Chairman and CEO) acknowledged there was definitely a pull-forward in some categories like PVC due to supply shocks, but it has worked its way through and is only one element of the diversified business. He confirmed the momentum exiting Australia is continuing for the first half, with the only caveat being potential future shocks, which are highly likely in the current environment.
Q: Niraj Shah (Goldman Sachs) asked how to think about discretionary investment in Australia in FY27 and its implications for margin. A: Andrew Young (CFO) provided color on costs, noting group costs were up 9.6% excluding D&A, with two-thirds driven by US network expansion. Inflation is running at about 3%, with additional investment offset by FX. He stated the investment impact is larger in ANZ, while the network impact is larger in the US, and the company will continue to assess the right level of investment to support strategic initiatives.
Q: Keith Chau (MST Marquee) asked about the CapEx outlook, given the lower FY26 outcome, and whether CapEx should return to the 2%-3% of sales profile with a catch-up in FY27. A: Andrew Young (CFO) explained that the reduction in CapEx was primarily due to timing, with last year's spend at 2.9% of sales reflecting the opening of more branches in the first half of this year. He expects the spend to normalize, with the 2%-3% range being the typical historical level and the right level going forward.
Q: Joseph Michael (Morgan Stanley) asked for an update on the data center opportunity in both the US and Australia and how material that end market is to the group. A: Peter Wilson (Executive Chairman and CEO) confirmed the company is benefiting from the data center build-out across its plumbing, HVAC, and waterworks businesses in all segments. He compared it to the mining boom in Australia, where Reece benefited from supplying products to trades working for hyperscalers, and stated it will be a positive for the business.
Q: Ramoun Lazar (Jefferies) asked about the sequential margin declines in the US and how to think about that into FY27 as recently rolled-out stores start to mature. A: Sasha Nikolic (Group President and Managing Director) noted that market conditions, particularly the large exposure to residential new construction, are impacting margins. He stated that as new roll-outs mature, which takes two to five years depending on the store format and customer mix, the margin profile in the US is expected to change. Peter Wilson added that the company has signaled modest growth for the US, which is the right thing to say at this point.
Q: Samuel Seow (Citi) asked whether the result, which came in at the midpoint of guidance given pre-war and pre-budget, required pulling any levers, or if the impact from the fourth-quarter noise was less than expected. A: Peter Wilson (Executive Chairman and CEO) explained that the company gave guidance due to the noise from external events. He noted that the impact was not as significant as initially feared, with some pull-forward of categories washing through reasonably smoothly across all regions, which is why the company landed within guidance.
Q: Daniel Sykes (Jarden) asked about the temporary price increases, how impactful they were, and whether they are expected to roll off through the next year. A: Peter Wilson (Executive Chairman and CEO) stated that the full-year inflation figures for ANZ and the US were not as high as media reports suggested. However, there were supply-cost increases in the latter part of the year, and the company exited with a slightly higher inflation rate in Australia. The US does not have that dynamic at this point.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
