I'll now let to hand the conference over to Mr. Tony Dragicevich, CEO and Managing Director. Please go ahead.
Thank you. Good morning. I'm Tony Dragicevich, the CEO and Managing Director of Capral. It's my pleasure to welcome you to our 2025 Full Year Results Presentation. I'm joined this morning by our CFO, Tertius Campbell. We will present what we believe are a very good set of results, given the more challenging market conditions we faced in 2025. Turning to the agenda on page 2. This morning, we're going to cover off a high-level business overview, highlights for the year. Tertius would be going through the financials in a normal basis, as he does, this morning he's got laryngitis, I will be doing that. Tertius will be able to answer any questions at the end that may come through. I'll do my best to cover those financials off appropriately.
I'll talk about the strategy and finish up with the outlook. Turning to the overview of the business and the market. Firstly, aluminium is used in a wide variety of applications. It's light and strong, making it an ideal material used in metal fabrication for building and construction, transport, marine, and many other industrial applications. Because of its light weight, aluminium also plays an important role in reducing carbon emissions, particularly in transport, to cars, trucks, planes, and boats. Aluminium is an important part of the Australian economy. We are one of the few countries in the world that has a fully integrated aluminium supply chain, from bauxite mining through to alumina refining, aluminium smelting, aluminium extruding and fabrication. Capral is Australia's leading producer of aluminium extrusions. We're also the number one distributor of extrusion and plate. Turning to slide 4.
Our business at a glance. Capral has six extrusion plants with eight extrusion presses. All of our plants, apart from our Bremer Park plant, are single press sites. Bremer has three operating presses. Annual extrusion capacity of 65,000 tonnes. In addition, we have 23 trade and distribution centers operating right throughout Australia. Total assets, AUD 480 million. Over 1,000 employees. Our key markets we operate in are residential and commercial building, along with a wide variety of industrial applications, in particular, the main ones being transport, marine, infrastructure, solar, and metal fabrication. Our market share and extrusion is around 27% of the total extrusion market in Australia. Annual revenue this year is just shy of AUD 690 million. That's Capral at a glance.
The market we operate in here in Australia, we're the largest aluminium extrusion manufacturer and distributor. There are a large number of other aluminium distributors. We also have five other local manufacturers, but our biggest single competitor in the market is imported aluminium extrusion. Now turning to the highlights for the year. Our earnings were ahead of last year and in line with guidance, so that's a pretty good place to start from. Lower volumes offset by higher LME and improved sales mix delivered revenue growth and solid earnings. Our industrial demand has softened, and the residential demand remains subdued. We do expect a recovery weighted to the second half of 2026. Our margins have held up well due to effective cost management.
Now, in the next slide, we go into a bit more detail on the highlights. A very pleasing result in a soft market, in line with the expectation. This demonstrates our ability to deliver robust earnings in what has been a fairly tough market, where residential remains subdued and the industrial markets were softer than expected. Volume at 65,000 tonnes was 4% down on prior year. Sales revenue, as I just said, just under AUD 690 million, was up 6% due to higher metal prices, particularly LME, and also favorable sales mix. Our underlying EBIT of AUD 35.8 million was up 4%.
Our net profit, our statutory net profit after tax, AUD 35.6 million, was lifted by a AUD 3 million insurance claim benefit, which we received through the year, a long-standing claim, and also a AUD 2.5 million tax benefit from the recognition of future year tax losses. Total earnings per share for the year finished at AUD 2.15 a share. Our balance sheet remains strong, with net cash of just over AUD 60 million. I'd like to point out that our net tangible assets increased 13% through the period to finish the year at AUD 12.72 per share. Throughout 2025, we conducted a share buyback, which reached the equivalent of AUD 0.55 per share.
We've declared a AUD 0.30 per share unfranked dividend, final dividend, taking our cash distribution to shareholders for 2025 to AUD 0.85 per share, which is up 12% on the prior period. I'd like to call out our best safety performance on record, with a total reportable injury frequency rate of 3.6, which we're very proud of, and we believe is industry- leading. Turning to the next slide, where I'll address the volume by sales channel and mix. Our overall volume, as I said earlier, was down 4% on last year. The market conditions were soft, mainly due to continuing weakness in the residential market and a slowdown in the industrial sector, some of the industrial sectors, especially in transport and infrastructure projects.
We are starting to see imports of fully fabricated windows have an impact on our market. Historically, fully fabricated imported windows have been in the domain of high-rise buildings, but they're now making inroads into the low-rise market as well. The window industry has initiated, late last year, a Anti-Dumping case against windows, which we'll talk a little bit about later in the presentation. Capral's industry diversification supports our volume during cyclical downturns in both housing and industrial. Over the last few years, our exposure to the residential market has reduced to around 40% of our total volume, and an increased exposure to our industrial sectors, which are now around 50%, with the balance being made up of commercial construction.
We do expect a stronger 2026, mainly in the second half, as the lift in the housing sector starts to flow through. Now turning to a more detailed analysis on the next slide of the residential market. The residential housing market has slowed in the last few years, as you can see on that slide, 2023 and 2024 in particular, impacted by high interest rates and affordability. Housing starts for 2025 are forecast to lift to finish at around 190,000, up 8% on prior year, but still down around 20% from the highs of 2020 and 2021. Now, bearing in mind that Capral's demand lags at least two quarters with.
I just want to talk about how we see the recovery coming. In 2023, 2024, we saw a cyclical low in the in-industry. Housing commencements were 106, or around the mid-160,000s, respectively, in both those two years. Detached and low- rise were around the 130,000 mark. Capral volumes were impacted as a result of that, through 2024 and 2025 as a result of the lag in building flow through from the lag. In 2025, we saw that stabilize. Although commencements lifted, detached and low rise lifted only moderately to 148,000. We started to see the early signs of improvement, particularly in the second half of 2025.
In 2026, we're entering the recovery phase, forecast in total, 197,000 starts. Detached and low rise lifting quite strongly to 156,000 starts, and improvement expected to flow through to our demand on our business from mid-2026. In 2027, we'll be approaching the mid-cycle upturn in the market. Forecast of 217,000, with detached and low -rise being close to 170,000 of that. Another strong lift in the key markets for us. That pipeline recovery supports improved residential demand, flowing through to our business through 2027 and beyond.
As those of you who followed us for a number of years now will know that our exposure in the residential segment is predominantly aligned to detached and low-rise dwellings. And that positions our group well to benefit from as activity progressively improves during 2026, and in the immediate years following that. We are expecting a lift from the housing market to start to flow through, as I said. What is holding it back is shortage of labor. A number of approvals are taking longer to turn into commencements. We are starting to see a rise in interest rates again, which is not gonna be helpful.
There is significant pent-up demand, which I don't think the interest rates will have a significant impact upon the forecast as we see them here today. We are looking for a lift from volume from the segment, which will underpin our volumes for the next few years. I'd now like just to share with you some recent projects that Capral's undertaken. Move to the next slide. Here we just some key projects showcasing some of our products. We've got Elizabeth Street Apartments in Vicar, a low-rise apartment development. A window that showcases our security doors in this particular project. Where we are the supplier of Amplimesh, long-term supplier and IP holder of Amplimesh brand.
The Fern Project in Western Australia and actually down in Busselton, produced by Busselton Aluminium Windows, featuring our Artisan and AGS framing systems. A standalone house, and then also another apartment project completed by Casmar Aluminium, one of our large customers here in Sydney, using the Capral AGS framing system. In the next slide, we highlight a couple of commercial projects. First of all, the Australian Christian College in WA, completed by LGA, a large fabricator of ours in Western Australia. Once again, using our framing systems and also in the middle of the screen there, the Dunn Bay South Camp, also completed by LGA WA.
To round it off, the Gosford Library, the new Gosford Library, completed by a very long-term customer of ours, PCW Commercial Windows, up on the Central Coast. A couple of really nice projects there to showcase where our products end up in both residential and commercial construction. Now turning to the next slide. Okay. The industrial sector. This has become a real key sector for us over recent years with as we've invested and grown into the industrial market through acquisition. 2025 saw the transport, infrastructure, and manufacturing markets start to slow. However, the marine and cladding sectors remained pretty solid. Transport is the largest of these sectors for us. That it was down from its highs.
As you can see there at the bottom left-hand corner of the slide, a graph showing new truck builds over the last 13 years. With a continual growth from 2021 through to 2024. 2025 saw that slide back from highs and new truck registrations were down 14%, and that impacted our volumes into that sector by a similar quantity. However, we are starting to see an early signs of recovery in 2026, with some of our truck builds, particularly here in Sydney, are reporting increased order books. The marine sector remained pretty solid and robust throughout 2025. Continuing commercial ferry builds, particularly in Tasmania, with Incat and Richardson Devine leading the way down there.
Defense Shipbuilding is also continuing to be strong and increasing. The major supplier into that is Austal Ships in Western Australia. However, with the defense spending around shipbuilding, the majority of the metal going into those vessels is steel rather than aluminium. However, we do get some solid volume coming through, and we'll continue to do so from that sector through Austal. In the solar market, imports are really impacting the demand for local solar rail. We find it difficult to compete with. We no longer anodize here in Australia because it's so expensive. And solar rail is typically anodized and imported from Southeast Asia. We did have a growth in the sector post-COVID, where supply chains were dislocated. Since that time, demand for local solar rail has dissipated somewhat.
We still supply a couple of key customers, but the volumes have come off from where they were a few years ago. We have, however, been involved with a couple of companies that are taking advantage of, or working with the government on the SunShot Initiative, which is the production of solar panels in Australia. We are starting to supply one of those solar panel manufacturers with framing systems from later this year. In terms of industrial construction, I mentioned that the infrastructure investment has slowed. Throughout 2025, we saw a big boom in government spending on infrastructure post-COVID. That has settled down. The next big boom will be the Olympics, and that'll kick in from probably end of 2026 through to right through the Olympics in 2030-ish.
Cladding sector demand continues to grow. Facades and aluminium is increasingly being used for facades and sunshades on buildings because of its lightweight. The manufacturing and general fabrication markets were a bit softer last year, but we expect them to remain stable, and we've held our share gains against imports post-COVID in that, this particular segment of the market. We also sell a number of, or a lot of other aluminium resellers in Australia. Us being the largest extruder in Australia, we service other distributors. That volume for resellers has softened. In recent years, it softened a bit as they've returned to imports, but in 2025, that volume really came off due to the weaker industrial market.
At the bottom of that page, you can see a graph of our industrial volumes over the last 13 years. You can see from a COVID peak in 2021. That peak was probably driven for us by a big lift in solar rail sales. That has moderated, as has sales to resellers. Market share gains have held throughout the rest of our segments, and you can see there that while we've come off our highs, they're still well above what they were in the, you know, through 2012 to 2020. Which is why industrial now represents, you know, close to 50% of our total volume. Now turning to the next slide, I just want to highlight a couple of major projects.
Industrial projects. Firstly, the Freighter Group, which is used to be called MaxiTRANS, been renamed last year to Freighter Group, the largest truck builder in Australia, and this is an example of a double- chassis tipper, which produced in Victoria. On the far right-hand side of the screen, we have the largest ferry builder, currently the largest builder of ferries, particularly for the international market, Incat. Last year, we did showcase the first electric ferry. This is another vessel built that's going to Santa Monica. And a lot of, you know, fully aluminium vessels. We supply all the plate and the extrusion for these vessels in Tassie to Incat. And it's a, you know, big part of our business and of our business based in Hobart.
I just want to share with you, a discussion or, to present to you PLP Australia. This project, which we will shortly show, play a video to showcase it. This project is called EnergyConnect. It's a nearly 1,000-kilometer interconnector link, linking the electricity grids of New South Wales, Victoria, and Australia. Right from New South Wales through Victoria and into South Australia, connecting the three states for the first time, and it's one of Australia's largest energy infrastructure projects. Clearly, this is, these projects are designed to help transform the grid as the country moves towards renewable energy.
The site featured in this video we're about to show is in Barooga, in New South Wales, which is near Mildura, for those of you who don't know Barooga, and certainly I didn't prior to this project. Capral has supplied nearly 300 tonnes of aluminium into this project. That aluminium was extruded at our Campbellfield facility down in Melbourne. PLP, our customer featured here, is expected to secure other like projects over the coming 10 years as the Australian Energy Group continues to be decarbonized and upgraded. We can just show this video. It's our latest "Crafted with Capral" video we do in conjunction with our customers.
When you're dealing with, you know, high voltage transmission fittings and projects like this, it's vitally important that it works first time, every time. This is the PEC project, so Project EnergyConnect. It runs all the way from South Australia into New South Wales. It's a 900-kilometer line to connect South Australia, New South Wales, and Victoria. They can share energy between the three states. PLP is a manufacturer and distributor of transmission, distribution, and substation products. We've delivered around 350 individual lengths of busbars, which have all been manufactured in our local facility in Western Sydney and made with Capral aluminium. In total, we will have manufactured and delivered around 5 kilometers of busbar that's running around the substation.
In all of our dealings with Capral over the many, many years, and the reason that we have wanted to partner with them on projects like this is the quality. PLP has been working with Capral for over 10 years. They're definitely our preferred supplier, particularly on major projects. The fact that they're local, they've really made a point of understanding our business, understanding what's important to our clients. We engage with Capral from our early tendering stage, particularly working through, ensuring, you know, the right alloys, particularly for the mechanical strength required within a substation, but also working with guys like Mark, to ensure that we can put together a very competitive and compelling bid for the project.
It's definitely the largest substation that PLP Australia has been involved in, and it's great to be out here today and to see the bars up in the air and everything being connected. We know part of it's energized, and that's all working, so that's fantastic. The other half should get turned on later this year, and we're very proud to be a part of the project.
Well, I hope you enjoyed that short video. It just shows you where our products end up, from trucks to boats, to power stations or power grids. Universal application of aluminium extrusion showcased here. We now turn to the financials. In Tersh's absence, I will run through these, but feel free to, Tersh will do his best to answer any of the hard questions at the end of the presentation when we get the opportunity. Bottom of the cycle earnings remain solid, despite 4% lower volume and inflationary cost pressures. Turning to the next slide, let me walk through the full-year financials. First of all, we will talk about metal costs, which have a major impact upon our cost base.
With aluminium being the aluminium mix core aluminium, primary aluminium, representing a significant part of our manufacturing costs. In 2025, aluminium pricing for Capral, or the industry here in Australia, is made up of two major components. One being the largest one being the LME, which is the green part of that chart you see in front of you there, which shows LME prices quarter by quarter from 2018 right through to the end of 2025. The dark green is LME, and the light green is the premiums we pay on top of the LME. They're typically the local or regional premiums, as we call them, add to the overall metal cost. In 2025, the regional premiums were pretty stable.
However, in the first quarter of 2026, which we're in right now, we saw premiums double compared to where they were in the final quarter of last year. Highly volatile. Not only were the premiums being volatile, but the LME has also been very volatile over the last 12 months and continues to be so. Aluminium is traded on the London Metal Exchange internationally. The pricing in the last few years, particularly, after the imposition of tariffs by the U.S. and, you know, and has changed trade flows and has had a significant impact on all commodity prices around the world. That's led to a lot of uncertainty, a lot of volatility in prices.
Throughout 2025 or through 2025, LME in Australian dollars, the slide's in Australian dollars, increased by 12%, which is a significant number. You can see there by the graph that we've moved from around the AUD 4 a kg mark or AUD 4,000 a tonne total metal cost up to close to AUD 5 throughout the last 12 months. That's challenging. It does impact our working capital levels, clearly. It also we have to work very hard with our customers to be able to pass these costs through. Now turning to the next slide, we run through our more detailed commentary on our P&L. FY 2025 was delivered what we believe at the lower end of the cycle.
As I said earlier, volumes were down 4% to 65,000 tonnes, as a result of the slower markets. Despite that, our underlying EBIT increased 4% to AUD 35.8 million. Our revenue increased 6% to AUD 68 million, primarily due to higher average LME and also improved product mix, partially offset by lower volumes. Our underlying EBITDA increased 2% to AUD 59.6 million, and as I said earlier, the underlying EBIT lifted 4% to AUD 35.8 million. The EBIT bridge tells the story pretty clearly. The volume impact was down, was a negative AUD 3.8 million. Price and mix contributed a positive AUD 6.8 million. Inflation impacted negatively by just over AUD 5 million. Depreciation broadly in line, and cost savings and other initiatives contributed AUD 3.5 million.
This is a good example of the disciplined execution throughout our business over the last 12 months and in prior years. This year, our significant items totaled AUD 2.3 million. This is primarily a non-trading one-off benefit of AUD 3 million from a long-standing insurance claim, partially offset by LME devaluation revaluation, resulting in a statutory EBIT of AUD 38.1 million. Net profit after tax, AUD 35.6 million, included the significant items and also AUD 2.5 million additional recognition of deferred tax benefits. Earnings per share increased 14% to AUD 2.15. Underlying earnings per share, which is probably more important, up 19% to AUD 2.00. On lower volumes, this is a commendable outcome.
Turning to the balance sheet on slide 16. The balance sheet remains in a position of strength. Net assets increased to AUD 244 million, with net tangible assets per share increasing 13% to AUD 12.72, supported by retained earnings and continued buybacks. Inventory increased by just over AUD 20 million, primarily due to higher metal prices and increased goods in transit. This price reflects LME rather than structural stock build. Our receivables remained well controlled, with our DSOs sitting at 45 days at year-end. At year-end, 31st of December, we finished with just over AUD 60 million net cash. Throughout the year, we negotiated and worked with our banks on a new syndicated banking facility of AUD 75 million, obviously, we remain comfortably within all of our banking covenants.
Our lease liabilities under the AASB 16 accounting standard totaled AUD 73.2 million, and the accounting treatment under AASB 16 reduces our reported net assets by close to AUD 20 million. This is non-cash in nature, so that's a reflection of the fact that our lease liabilities are higher than our leased assets under this accounting standard, new, a relatively new accounting standard. We have an additional deferred tax assets of up to AUD 27 million is available to be recognized into the future. Importantly, Capral's working capital remains sensitive to LME volatility, but we have capacity to manage that through our very strong balance sheet. Now turning to slide 17, Cash Flow. Our operating cash flow remains solid despite the working capital build.
Operating cash flow just under AUD 44 million despite a working capital outflow of AUD 11.6 million, driven by the higher metal pricing. CapEx of AUD 11.8 million was in line with plan, focused on plant reliability, automation, and productivity initiatives. Free cash flow, AUD 10.2 million, it's after lease principal repayments. We returned a total AUD 16 million to shareholders through both dividends and buybacks, resulting in a modest AUD 7.5 million reduction in cash total. Our trade instruments, which is mainly letter of credits associated with imports, increased to AUD 42.4 million, consistent with the imported product flows and the higher metal pricing. The key point I want you to take away from here is that our underlying cash generation remains very solid, even at cyclical lower volumes. Turning to slide 18, Capital Management.
Our capital allocation framework remains unchanged. We target a cash distribution to shareholders of between 40% and 60% of underlying earnings over time, maintaining flexibility between dividends and buybacks. In FY 2025, we returned AUD 0.85 a share, representing 43% of underlying EPS. We bought back just over 859,000 shares, an average price of AUD 10.68, which was below the NTA, and that's accretive to our EPS and our long-term shareholder value. Looking ahead, we intend to continue buybacks where value accretive, with unfranked dividends used to complement returns as required. Over the past five years, Capral has delivered a total shareholder return of approximately 170% or around 22% per annum compound growth.
Capital returns are supported by the strong net cash position and our undrawn facility, preserving flexibility for growth and volatility. In closing, in summary, resilient earnings through a slight tougher market, strong balance sheet and disciplined capital management, and this position positions Capral very well to manage volatility and benefit as planned residential demand recovers into the second half of 2026. Okay, that concludes the financials. I'll now move on to strategy, followed by outlook. We remain focused on increasing return on invested capital, strengthening our competitive position, and growing our distribution footprint while navigating the changing market conditions. The next slide, I just want to talk about our high-level strategies, and these remain consistent with prior years.
I won't go into a lot of detail here 'cause we've been through this before, but we build on what we do on our strengths. We're the largest, we're the biggest network, and we've got the most experienced people in this market. We continue to look for ways to improve and optimize what we do, and with a view to building on these things to grow for the future. That's about leveraging our capabilities, which are significant in this market, developing new products and new markets, expanding our distribution footprint, not only geographically, but also into adjacent markets, and I'll talk a bit about that on the next slide. Please go to. Thank you.
First of all, just in terms of our key strategies or what underpins what we do, we want to clearly continue to look at to improve our strategy, growing into new markets, enhancing our value to customers. In manufacturing, in particular, I just want to talk about what we've done in 2025 to start with, and then talk about 2026 plans. In 2025, we completed the second stage of the Penrith plant rebuild. That started in 2023 with the replacement of the extrusion press. 2024, sorry, 2025, July, actually, we replaced the billet furnace and the saw, and planning for the future stages of Penrith is well advanced.
That, which will contain upgrading the material handling, aging, and packing parts of the plant, so that will be progressively completed in the years ahead. We are in the process of upgrading our shop floor control systems, with four plants completed and two remaining. This will deliver tighter production controls and improved productivity. In 2026, we've got some major upgrades planned throughout the year, and the big ones over the 2026 Christmas shutdown period, and then into January. The first is the upgrade of our press in Canning Vale in Western Australia. This is now the oldest press in our fleet, and we'll be embarking on the first stage of that upgrade this year.
The second major project this year will be at Bremer, our B1 press, so 1 of our 3 presses in Bremer Park. We'll be installing a new log furnace. This furnace is unique, and that is the first electric furnace in the Southern Hemisphere. Typically, in extrusion manufacturing throughout the world and Capral as well, these furnaces are gas-fired, giving us the temperature requirements at relatively low reasonable capital costs. The development with given the development of renewables throughout the world, and particularly in Europe, kicking off, we've now seen electric furnaces being developed for extrusion manufacturing. There are 5 already installed, with a number more being planned in Europe this year.
We will be installing in early 2027, the first electric log furnace in the Southern Hemisphere. That has been made feasible by a government grant. We've been approved ARENA funding to contribute 50% of the cost of this furnace, which the total cost is around AUD 7 million, which is nearly double the cost of what a gas furnace would typically be for a similar installation. The ARENA grant has made that affordable for us, we're very pleased to and very proud to have to be install the first electric furnace and hopefully lead to it, which will lead to improved productivity and lower emissions.
As time goes on, we certainly hope that the capital cost of these electric furnaces will come back down closer to the gas equivalents, and that we'll be, as we look forward to future years, we'll be able to over time, when they're due for replacement, look towards electricity to reduce our overall electricity heating ability to reduce our overall carbon emission footprint. Now moving to our distribution business, which has been a significant focus for us over the last five years. Back one slide. Sorry, can we just go back one slide, Nicky, to distribution? We continue to grow Capral's distribution operations with the objective of growing our direct-to-market channels.
A new residential framing system, window framing system, was launched in 2024, with a thermally broken, more thermally efficient variant launched in the first half of 2025. New product development in our building systems business is a key component of what we do. We've also completed the acquisitions of our building systems. Again, we completed the acquisition of ComSupply in WA late last year. ComSupply is an AUD 15 million sales revenue, aluminium and hardware distribution business. The acquisition total acquisition cost was around the AUD 6 million mark, and it was acquired for less than 4 times earnings. We're looking forward to having ComSupply on board for a full year in 2026, contributing to our building systems growth and earnings growth.
We are looking to expand this model onto the East Coast over the years, in the years ahead. In addition, we acquired four aluminium trade centers over the last few years. We continue to look for further opportunities to expand our geographical trade center footprint, either by acquisition or greenfield. We will certainly have at least one either acquisition or new site or greenfield site, 2026. We continued on the sales side of our business, sales and marketing. We continued to invest in technology to improve our sales effectiveness, continued to develop our online presence through our website and e-store.
We promote our customer partnerships through our Crafted with Capral videos, for example, that you've just seen, and also our Capral Can-Do series, Sorry, our Capral Can-Do series of videos, which features all of our value add and manufacturing operations. Earlier this year, in fact, a few, last month, late January, Capral was honored to be selected as the launch site for the new government-funded Australian Made campaign. That event was held at our Smithfield plant here in Sydney, attended and opened by, or launched by the Industrial Minister, Tim Ayres, in conjunction with the Energy Minister, the Honorable Chris Bowen. So we're very honored to be selected as that launch site for the very high-profile Australian Made campaign. If you're looking out for it's hard to miss, both on television and press, and online.
Okay, now turning to slide 22, which is addressing imports and anti-dumping. Capral continues to lead the local industry in the pursuit of fair trade. Anti-dumping is important in assisting fair competition in the Australian market for aluminium extrusion. Imports represent over a third of the total Australian extrusion market, and with international trade flows being in a state of flux, it's even more important that we continue the fight for a level playing field for a local industry that directly employs over 2,000 people. Just in terms of the global context, while the U.S. tariffs have no direct impact on Capral, because we do not export into the U.S., the resulting changes in trade flows are a real risk, which is why Capral does need, so not Capral, the industry, and Australia needs a robust anti-dumping system.
Importer windows, which I'm going to talk about in a minute, is a case in point as to representing a change in trade flows as a result of some of the things that are going on internationally. The good news, late last year, the measures against China, the anti-dumping measures in China, were successfully extended for a further 5 years. While the duty levels and subsidization levels are relatively low, in conjunction with the floor price, they do assist keeping dump pricing out of the market.
Imports still come in at an undumped price and at a relatively low price, it does keep the worst of the dump pricing out of the market, it does assist us in what we do at the local and the whole local extrusion industry. The measures against Malaysia and Vietnam are currently under review, that will be played out this year. We've had a new extruder start up in Newcastle, as I said, at half year presentation. That extruder in Newcastle is still in the commissioning phase, they're affiliated with a large Chinese importer. That Chinese importer is currently the largest importer of aluminium in Australia, it's interesting that they have started a new extrusion operation in Newcastle.
Okay, I think that covers the most things on Anti-Dumping. We are obviously actively participating in government forums on reform in this area, strengthening the system. I will touch on the initiation of a windows case, a windows and doors case. This case, as a result of increasing imports of fully fabricated windows into the commercial and residential window markets in Australia, over the last couple of years, and particularly in relation to the result of those trading cash flows, the Australian Glass and Window Association, in conjunction with one of the largest window fabricators in Australia, have initiated an Anti-Dumping case. That case was taken on board by the Commission, Anti-Dumping Commission, late last year, and the case is currently under review.
The commissioner has received over 430 letters of support for this case, which is by far and away, the most activity in terms of supporting a case that the commission has seen in its history. That will take most of this year to play out. Okay, moving forward to sustainability and ESG on the next slide. I won't go through this in detail, but I will point out a couple of key things. Capral's ambition of net zero by 2050, and we have a 20% reduction target in emissions by 2030.
During 2025 year, our emissions, Scope 1 and Scope 2, fell 9%. We're well on track to meet our 2030, 20% reduction target. Just point out that Capral is the only ASI-certified provider, so ASI is the international certification body for aluminium. We're the only certified supplier of low carbon aluminium in Australia, and this enables us to offer certified lower carbon aluminium products through our trademark LocAl brand, and that is delivering growth through our sales channels. We've also being first cab off the rank to issue our first climate report, compliant with the new Australian Accounting Standards. That has been included in our pack. Matias? Yep.
Whole 17 pages of it, I'm sure you're gonna find that very interesting reading. We'll leave you to go through that. A significant amount of effort and time, huge amount of time, resource, and effort by both Capral's ESG team, Matias's accounting team, and our erstwhile auditors, KPMG, to produce a compliant carbon reporting report under the new Australian standard, which we've done. We've ticked that box. Now moving to the outlook and guidance for the year on our final slide. Okay. I've spoken in some detail about the market conditions that we expect for the year ahead, of an improving industrial market flowing through to lift our volumes from mid 2026. We continue our operational focus on productivity, recovery, and cost control.
Disciplined capital expenditure directed towards our plant reliability, our automation, and efficiency improvements. In terms of our guidance, on the basis of the market performing as we expect it to do, we do expect our first half earnings to be broadly in line with the prior period. On the back of improving demand in the second half, our full-year earnings to finish slightly above last year. Thank you for listening, and we're now happy to answer any questions that you may have.
Thank you. If you would like to ask a question via the phone, you'll need to press the star key followed by one on your telephone keypad. If you would like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. If you'd like to ask a question via the webcast today, please type your question into the Ask a Question box and click Submit. Your first question from the phone today comes from Andrew Johnston from MST Access. Please go ahead.
Yeah, good morning. A couple of questions. Look, great result. Sort of boringly solid in a soft market. I suppose the gross margin was underpinned that. If I can start there. With your continued increase in proportion of earnings coming out of distribution-type businesses, should we expect that gross margin to continue to trend upwards as it has been for quite a few years now?
Yes, Andrew. Well, firstly, I just wanted to call you out on. Our earnings may be boring, but at least they're solid and going up, we'll take that. Thank you. Look, our earnings have improved on the back of increased focus on growing our distribution business. You're quite right. We do expect that to continue in the years ahead as we look to continue to grow that part of our business. However, we're expecting to see a lift in demand from that residential segment. The major provider of that will come through our major window fabricators, which are mill direct customers.
We will start to see, as that residential market really starts to kick in and demand start to lift, that we will start to once again see a lift in volume from those large residential window fabricators that supply the major suppliers into that residential window and door segment. Typically, those customers are, because they're so large, are at the lower end of the margin spectrum. They buy, they purchase directly out of our aluminium manufacturing sites.
Right. Okay. There's a couple of things driving that. By the way, Tony, that was my comment about boringly strong returns was actually a compliment. You know, you actually deliver solid growth, notwithstanding the notwithstanding, you know, volumes actually being soft over. The boring comment was actually a compliment in a market that's full of, you know, high volatility stocks. Yeah, please take that as a compliment. Secondly, safety. Outstanding performance on safety. I think that provides people outside the company with insights into the underlying operating culture of the business.
Can you talk about what you've done in the last couple of years that has enabled you to deliver those improved safety numbers?
I appreciate you calling that out. It's Andrew, with safety, we have a, you know, we've got 5 core values at Capral. Safety is the 1st of those core values. We've certainly put a lot of work into this area. I think the thing that has really driven our performance here has been the automation of our Integrated Management System with our shop floor system. When, you know, the cumbersome nature that of handwriting safety observation and risk assessments and continually updating them, used to absorb a lot of time from our frontline supervisors and safety specialists.
The automation of that through our IMS, Integrated Management System, we call it IMS, which is an internally developed system by our ESG team, has really led us to be able to spend way more time on what's important in terms of risk assessment, safety observations, and really identifying what the key risks are and what the key behavioral issues are in our operations. I, you know, if you ask me, I think that's probably been the biggest factor in the last 2-3 years of our improved performance and safety. Last year, in particular, we've tasked all of our managers within the business to conduct safety observations and leadership walks through the business and be very visible around it.
You know, and that's certainly, you know, increased the level of, even further increased the level of intensity, and focus around safety in our operations, which is, you know, which is a good thing. Clearly, our objective is zero industry injuries, but we do have, you know, close to 600 odd, 700 manufacturing staff, and distribution staff in our operations. It's, you know, keeping those people safe, every day is, doesn't come without a lot of effort. You know, we're very proud of this result.
Thanks. Well done. Finally, just the, probably a pretty small issue, but just the issue around the electric furnace. What about from an operating cost perspective? You know, electricity cost versus gas cost to heat the, to heat the ingots. How's that going to, how's that going to change with the electric furnace?
There is an overall, given the fact that gas prices have tripled in the last 3 years, Electricity prices have also gone up, but not as much as that the actual equivalent energy cost price of this is neutral currently. We do expect over time that gas prices will continue to be high or as the electricity prices, if we can listen to our esteemed federal ministers, will over time come down. We will see. We're planning for a neutral outcome.
The efficiency of the new furnace is much improved versus the gas furnaces.
Sorry, I missed that. I missed that, Tertius. What was the?
The efficiency of the furnace is an improvement over the gas. Actually, there's actually less energy being consumed in totality.
Right. Right. Okay, okay. I'm assuming that's partly because you're upgrading the furnace, but also partly because it's actually electric rather than, rather than gas. Would that be fair?
Correct.
Okay, terrific. Okay, thanks, that's for me, and again, well done on a great result.
Thank you. Once again, if you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. As there are no further phone questions, I'll now hand back over for any webcast questions to be addressed.
There's no web, no webcast question. There doesn't appear to be any questions on the web, which means we must have covered everything off comprehensively. Yes. I think that will wrap up today's presentation, and thank you for your attendance. We will get on with hopefully delivering a even stronger result in 2026. Thank you for your attention this morning. Thank you.