With the update released to the ASX yesterday afterrnoon, we will have some time for Q&A with the management team. There will be a choice of two options. First, research analysts are able to raise their hand via Zoom should they wish to ask a verbal question of the management team, or we will also take written questions via the Q&A function at the bottom of your screen for all investors. We will endeavor to get the majority of questions asked, in some cases, combining questions on the same or similar topic. With that, I'll pass it over to you, Cameron and Fergus.
Thank you, Sam, for the introduction, and thank you to everyone who's dialed in this morning to listen to our full-year results presentation. As Sam mentioned, I'm here with Fergus Hume, CFO. In summary, it's been a strong 12 months, and the business has performed well. We've delivered a strong EBIT result, and it's been really pleasing to see the growth come from our construction materials business and our composite fibre technology business. The group's revenue for the year was AUD 431 million, and while this is down on the prior year due to the completion of that large precast tunnel project we had in FY 2024, the group has delivered earnings growth. Improved margins across the construction materials and composites businesses have enabled us to deliver an operating EBIT of AUD 41.8 million, and this is a 9.9% increase on FY 2024, where our operating EBIT was AUD 38.3 million.
This is a great achievement given the reduction in project services revenue. This result has been driven by improved market conditions, both pricing and volume, together with operating efficiencies with increased utilization of assets across the construction materials and CFT businesses. Net profit after tax for the year was AUD 22.7 million, significantly higher than the prior corresponding period, which was AUD 10.3 million. The strong operating cash flow generation has enabled us to fund AUD 15 million in land acquisitions during the year to be used for future concrete plants while still reducing our net debt to AUD 34 million, which is a reduction of AUD 13.6 million compared to FY 2024. Given this performance, the board have declared a full-year dividend for FY 2025 of AUD 3.2 per share. I'll take you through the performance of each of our operating segments, starting with construction materials, which again has delivered improved results.
The revenue run rate experienced in the first half continued into the second half, with the business delivering a full-year revenue result of AUD 257 million, which is a 19% increase on the prior year. Cement volumes remain stable, and the business has delivered improved revenue and EBIT margin growth through pricing improvements and operational efficiencies. Our concrete revenue was up 54%, and the business delivered an EBIT result that was a significant improvement on the prior year. This improvement was driven by an increase in volumes, strong market conditions, and a disciplined operating environment. The growth in the concrete business is adding value across the whole construction materials business through our vertically integrated supply chain model. As concrete volumes improve, so does the performance of our cement, quarry, and transport businesses. Margins continue to improve across this segment as we realize the benefit of good operating discipline through the period.
We've continued to execute our growth strategy in concrete, with three greenfield sites purchased during the year for future plants and another site now under contract. The construction of two plants is underway, and they'll be completed and servicing the market later this calendar year. The quarries business also delivered improved performance with a 30% increase in revenue and 46% growth in EBIT. The quarry in Southeast Queensland was a significant contributor to the result, with the investment in the plant upgrades providing additional capacity to service increasing demand and production efficiencies, driving improved margins. Moving on to the project services, the decline in revenue compared to the prior corresponding period was anticipated and reflects the cyclical nature of large project work.
While bulk haulage revenue was down on the prior period due to the completion of two projects, an improved EBIT margin in the second half enabled the business to deliver an EBIT result for the year that was consistent with the prior period, despite the lower revenue. I'll now move on to the composites business, and this business is really starting to deliver on our expectations. Overall, revenue for the segment was AUD 68.4 million, which is a 15% increase on last year, and it delivered an EBIT result of AUD 9.8 million compared to AUD 400,000 in the prior period. Looking at the Australia and New Zealand business, the growth in revenue has been driven by an increase in cross-arm volumes, particularly the sales into New Zealand, and the increasing demand for power poles has really ramped up.
The business has also delivered improved margins across all product lines, particularly power poles, due to the manufacturing efficiencies we've achieved as our volumes ramp up. Pricing discipline, targeted project selection, and operational efficiencies also delivered improved margins in custom build, which is the area that services the pedestrian infrastructure and road bridge markets. The strong demand for CFT products and improved margins have delivered a great result for the Australian business. As I mentioned at our half-year results, the capital that we've invested into this business is now providing the returns we anticipated, and we are manufacturing and executing projects such that margins are now meeting our expectations. We continue to be focused on improving these margins as the operational efficiencies achieved during the year become embedded.
Similar to concrete in the construction materials segment, pricing discipline, particularly in custom build, has also been key to delivering these results and remains an ongoing focus for our business. It's been pleasing to see the improvement in our U.S. CFT business. Revenue has improved on FY 2024 with a number of new projects that have been delivered throughout the year, and there has been a significant reduction in the losses with the right sizing of the business and a real focus on operational efficiencies. The U.S. business does still need significant uplift in volumes to reach the break-even point, and that is our current focus. I'll now hand over to Fergus to take you through the balance sheet and cash flow.
Thanks, Cameron. The FY 2025 balance sheet is showing an improvement in the working capital of over AUD 12 million, mainly as a result of the improved collection of receivables. The net debt has decreased by AUD 13.6 million, with a gross debt reduction of AUD 9.3 million, together with an increase in cash of AUD 4.3 million. It should be noted that we've managed to reduce the net debt and significantly increased our capital spend, including over AUD 15 million on land for future concrete plant sites. With a net debt to EBITDA leverage ratio of less than 1x and term debt facilities only drawn to 35% of our limits, we are well placed for growth opportunities, including the ongoing expansion of the concrete plant network. Onto the cash flow, a good cash conversion from the operating results has resulted in good operating cash flows.
Significant capital expenditure was made during FY 2025, particularly during the second half: AUD 36.6 million for the year and AUD 28.2 million in the second half of FY 2025. The capital expenditure was a mix of growth and replacement spend. The growth spend was primarily on the fixed plant concrete business, with over AUD 15 million on land for new plants and AUD 3.8 million on plant development and mobile equipment and plant upgrades in quarries and CFT. The replacement spend was on trucks for the bulk haulage project business and the construction materials haulage in cement and quarries. Also spent on cement storage replacement and some light vehicles. The improved cash conversion has been used on the aforementioned capital expenditure and the reduction of gross debt, and we've also recommenced the payment of dividends in FY 2025. I'll pass you back to Cameron now to give you an update on the outlook.
Right, thanks, Fergus. Market growth is expected with the Olympic infrastructure requirements and the strong residential housing sector in Southeast Queensland. In line with this growth generated from the anticipated busy construction sector, cement volumes should increase, particularly from Wagners owned plants. Margins may be impacted a little by FX fluctuations and increase in raw material costs, however, generally, we see a very strong market ahead. Our concrete plant network will be expanded by an additional three plants during the full year. As I mentioned, two of them will be operational by the end of this calendar year, and we'll also increase the capacity at our Pinkenba concrete plant, all of this driving volume growth. Some impact to earnings can be expected during the startup phase of the new plant sites. However, volume growth at the existing plants will improve our utilization and assist with margin expansion.
The expansion of our Southeast Queensland concrete plant network will remain a focus, and we will continue to look for sites for further plants that align with our strategy. Quarry volumes are also expected to increase based on both our secured pipeline and expected market demand. The prior capital investment into this business, particularly at our Wellcamp quarry in Southeast Queensland, will continue to deliver improvements in capacity, product mix, and production efficiencies, all resulting in improved margins. In project services, at this stage, there are no new projects secured to deliver any material revenue in FY 2026. The bulk haulage business is expected to deliver slightly lower revenue and earnings in FY 2026 with the completion of those two contracts I called out earlier. We will, however, continue to pursue new opportunities domestically and internationally, and the business remains well positioned to respond to these opportunities as they arise.
In our CFT business, Australia and New Zealand utility networks will provide an increased demand for CFT power poles and cross-arms that is already evident from the orders received in July and August. The increases in volume will again improve utilization of the plant, further improving our margins, particularly in power poles, where we anticipate the most growth. The business is also exploring further automation in the production process of poles, similar to what we have done with our cross-arm automation line, which will again drive further improvement in the margins and longer term as this technology is developed. Our current volume forecasts beyond FY 2026 are showing that we will need to increase capacity at our manufacturing facility at Wellcamp to service the expected growth in the business.
This means that capital will need to be spent this year building an additional two pultrusion machines to create the required capacity to service an upcoming market. Further improvement is also expected in our U.S. A. business. There's a solid pipeline of work secured for the year, which will result in an increase in revenue compared to the prior year. Manufacturing efficiencies will also improve margins in custom build projects, and we are extremely positive about the opportunities that utility networks in the U.S. provide for our composite power poles. Like the Australian business, to meet this anticipated demand for power poles, it is likely we will require an increase in the current manufacturing capacity. This will enable us to manufacture all product in the U.S. and avoid the expensive freight costs and tariffs we are currently subject to as we ship product from Australia.
We do acknowledge that there is still some work to be done in the U.S. and will need a significant uplift in revenue to achieve a break-even result. However, we are excited about the opportunities for this business. Just on CapEx, there is going to be a step up in CapEx in FY 2026 to enhance capacity and support the future growth of the business. We're investing in a number of new concrete plants with the construction of some already underway, and additional sites may also be acquired. We are upgrading some of our storage facilities at Pinkenba, which will provide operational efficiencies in the cement production process, and we are going to have to invest in additional plant capacity in CFT, both Australia and the U.S., as I've just mentioned. In summary, we're pleased with the performance for FY 2025.
The growth in the underlying construction materials segment and in our CFT business has been positive. Volumes have remained strong throughout the period, and it's been the improvement in margins driven by excellent operating discipline, along with positive market conditions, that has enabled the delivery of this positive earnings result. The construction sector, particularly in Southeast Queensland, is a great environment to be operating in with the amount of activity taking place, which should only increase, driving demand for our products and services. We've got a great team of people working at Wagners and are proud of the products and services we are delivering to our valued customers. The company has invested heavily in assets, which are now driving improved margins. That really concludes the formal presentation for today. Again, thank you for joining us, and as always, Fergus and I are happy to take any questions you may have.
Great, thanks, Cam. As a reminder for the audience, research analysts can ask questions by raising your hand on Zoom, and I can unmute your line, while the rest of the audience can submit written questions via the Q&A function at the bottom of your screen. The first question on CFT: great to see improved profitability in CFT. How did operational efficiencies aid in both Australia and the U.S. business, and what further improvements are you targeting in those businesses?
Thanks, Sam. The operational efficiencies really come as volumes ramp up, and you get that ability to get excellent utilization out of the machines. We've still got a little way to go as far as operational efficiencies go on our power poles, as I called out. We do need to embark on a more automated process for the final processing of the poles. However, we've been really pleased with the production output of the plant, and the machines are certainly working as the nameplate sort of specification said they should.
Great, thank you. On the plant network, you've highlighted AUD 15 million of new land purchases. Can you walk us through the motivation here and what comes next on these sites?
Yeah, in the last 12 months, we've been really working hard to acquire sites in areas where we can't currently service the market. There's one to the west of Brisbane, there's one to the south of the Brisbane CBD, and there's another one that joins the gap between Pinkenba and Narangba up in the Caboolture area. Our focus has been to identify the areas that we can't currently participate in concrete sales and secure land and build concrete plants on those sites. What comes next is two of the sites will have operating concrete plants before Christmas, with a third one in the second half. In addition to that third one, there'll be a significant upgrade made to the concrete plant at Pinkenba which will improve our capacity there.
The small batch plant we have at Pinkenba is running at full capacity, and there's plenty of opportunity to increase sales through further investment there. The driver, the question around what are the drivers for this is, and I mentioned it in my speaking notes earlier, the vertically integrated model and the value that is achieved through concrete sales, through to aggregates, fly ash, cement, haulage, is really, really important to our business. The driver is to support that vertically integrated supply chain model through additional sales.
Great. Next question will be from Max Andrews at Unified Capital. Max, please go ahead.
Hey guys, can you hear me okay?
Yeah, Max, we can hear you fine.
Awesome. Well done on the result. Just on the CFT business, obviously strong second half result, particularly on margins. I just want to understand the drivers behind this and if margins have further upside. Also, just on the plant CapEx you have in 2026, just some color on where the demand is coming from. Is this more power poles or custom builds?
Yeah, okay. The margin growth has really come out of production efficiencies as we've started to build out the production capacity of the new cross-arm automation line. The efficiencies we're achieving in that cross-arm automation line have been really impressive, and it's starting to really perform well. The other area is just the utilization of the two machines that we put in to build power poles, given the high level of activity we're experiencing in the power pole market. They're probably the two areas that have moved the dial the most in CFT. In conjunction with that, it's been that targeted selection process on our custom build activities, the pedestrian infrastructure and road bridge area. We've taken a really sort of concentrated approach to target work that fits our profile rather than just be everything to everyone in that business.
Cool. Just another one, with the concrete strategy you've got going on, obviously you'll need a fair amount of aggregate. Do you have enough kind of capacity at your current quarries to feed this future demand, or do you think you might need another quarry?
We won't have, the Wellcamp quarry won't be situated to economically get aggregate to all of the Southeast Queensland plants. It certainly covers quite a few of them. We currently source some aggregates from third-party producers to the north of the Sunshine Coast and down into the Gold Coast. We do have a greenfield quarry site just west of Brisbane, and at a point, our volumes will get to a level that will justify the investment to open that quarry. It's currently sitting there ready to go, and we just need the volume to underwrite the capital expenditure required to start that site. We also have another site to the north of the Sunshine Coast, and that's exactly the same scenario. We will open that when the volume is appropriate.
Awesome, that's great, Cameron. Just the last one. Obviously, a bit of momentum in May and June with the dry weather. Just wondering if this has kind of continued in July and August.
Yes, is the answer. July was our largest concrete sales month. The momentum has certainly continued. There was the Brisbane show holiday and those types of things certainly put a bit of a kink in your tail. However, there's no doubt at all that that momentum that we saw in May and June has continued on into this year.
Awesome, thanks guys.
Great, thanks Max. Next question from Liam Schofield at Morgans. Liam, please go ahead, thanks. Liam, are you there? Liam at Morgans? No, okay. Next question. Are the U.S. tariffs an impediment to CFT in the U.S.?
Quite the opposite, Sam. The tariffs are really a situation where manufacturing in the U.S. is certainly much more favorable these days. We're up against sort of stainless steel, timber structures. I know the tariffs on steel have created a lot of issues for many infrastructure service providers in the U.S. All of our glass and resin is sourced locally in the U.S., and the tariffs have no impact on our business. While we're getting new product lines to market and sending products from Australia to seed markets, we're certainly subject to tariffs and high shipping costs. As we ramp up our production capabilities in the U.S., tariffs are not an issue at all and, if anything, are probably assisting us a little.
Okay, great, thanks. A couple of submitted questions from Liam at Morgans. Can you please talk about the unit economics of the batch plants? What does adding a new batch plant do for group earnings?
It depends on the area that you put it, but the main benefit for us putting a concrete plant is the cement and fly ash pull-through that we put into it from both of our cement and fly ash businesses. If it's close enough to a quarry where we're supplying the aggregate, it pulls through from the aggregate business as well. At a concrete plant level, we've seen a turnaround. The prices are probably still got some room to move up, but they've moved up into a position where at a concrete plant level, we are making money at the concrete plant gate if we can get the right volumes. You're getting 100% of the pull-through profit on your cement and your fly ash. If it's close enough to service with one of our quarries, we get the aggregate pull-through as well.
Okay, thanks. Next question from Liam...
The change to our cement plant is each concrete plant can add somewhere between 3%-inance 5% growth to our cement sales, which is significant.
Okay, great, thank you. Next question from Liam. Cement volumes remain stable versus PCP while concrete volumes increased 65%. Does this mean borrow volumes declined?
No, it doesn't. The volumes that borrow volumes did not decline and have not again this year. The volumes that declined were mainly associated with the project work. Quite a lot of cement went into some project work, particularly around road stabilization. There's been a big slowdown on the investment in road infrastructure across Southeast Queensland. The biggest market decline we saw was in that stabilization work where they put cement into the gravel on the roads and treat them to get the substructure right before they build the road on top of it.
Okay, great, thank you. Last one from Liam. You've flagged that gross margins may be impacted by FX fluctuations and increases in more raw material costs. Can you just expand on the cost headwind, please?
On the FX, it's very difficult to pick. I guess the flip side of that is margins could improve if the Australian dollar strengthens. It is a driver in our cement business that certainly moves the dial as it moves, as the exchange rate moves up and down. It is very difficult to know what it's going to do, but we think it's important people understand that risk in the business, if you like. Raw materials is a watch point for us. We're currently contracted out until early next year, and that negotiation will commence in November, December this year as to where our raw materials are going to sit and our shipping costs are going to sit next year. We do believe we're on a pretty reasonable deal at the moment, so wouldn't be surprised if we saw some increase in that area.
Great, thank you. In the power pole segment, is the growth you're expecting a function of market share growth, or is the market growth so strong that you're not displacing any existing suppliers?
A combination of both. There is certainly some recognition that our power poles demonstrate a much, much lower whole-of-life cost compared to a timber pole, and the maintenance costs associated with composite poles compared to timber poles are far less. For example, with a timber pole, a crew goes around and digs about 400 mm below the ground surface to check that the pole's not rotting or eroding away. That function, if you like, with composite poles is not necessary because they don't corrode away or rot away under the ground surface. There is certainly an element of displacing some timber pole sales into the market, and there is just the growing demand for electricity connections across the country that is also driving growth in the overall pole market.
Thank you. Just on dividends, in light of the outlook commentary, how should we think about dividends moving forward, particularly if sustained performance within the core business?
As we said last time, Sam, our intention is to continue to pay dividends, albeit we do have a big CapEx bill in front of us, but we're pretty confident on the outlook that we'll see some growth coming. We're quite comfortable to continue paying a dividend. It'll probably be a full-year dividend as we've done this year. We're probably not looking to start doing any interim dividends or things like that.
Got it, thank you. Cam, you mentioned the Olympic type infrastructure. When do you specifically see that hitting the market for tendering?
I think tendering will start in the next few months, and any sort of volume of work is at least 6 - 12 months off. There's a whole lot of planning and engineering work to be done before anyone can start construction.
Okay, great, thank you. Can you provide the EBIT result for the CFT business in the U.S. specifically?
We did call it out. It was a AUD 1 million loss in AUD.
Which is a major improvement on the prior period, a significant turnaround.
Okay, great, thank you. Just a final question, in terms of the CapEx, it was, I think, AUD 36 million or thereabouts in FY 2025. Are you able to give any specifics around the range that is anticipated in the next year or two?
We're expecting it to be higher than that in FY 2026 on the basis of what Cam was talking about with the concrete plant builds. Some of those concrete plant builds that we're going to do are very high capacity plants and higher than what we've built, and we're doing that based on what we believe is going to be the population growth and the demand in those areas. They're going to be a little bit more expensive than what we spent previously. We need to expand our storage at the cement plant, that's going to be in the, we've done some replacement of storage this year and probably looking to increase storage next year. We've got the CFT expansion on the protrusion machines to meet the demand in poles. We've actually started some of that CapEx now on that pole protrusion machine production.
We're expecting higher than what we spent this year. It could be 50% higher than what we spent this year.
Thank you. I think that's all the time we have for questions today. If you do have any follow-up questions, please feel free to send them through to me, and we'll endeavor to get back to you. With that, Cam, I'll pass it back to you if there's any closing comments.
Thank you, Sam, and thanks to all the listeners who have dialed in today. As I said, we're quite pleased and proud of the business performance over the last 12 months, and we're looking forward to a really strong operating environment ahead of us.
Great, thank you very much for joining today's Wagners' Full-Year 2025 Results Call. Thank you and enjoy the rest of your day. Goodbye.