Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wagners Holding Co Ltd (ASX:WGN) reported a strong EBIT result of $20.3 million, driven by improved market conditions and operating efficiencies.
• The company's net profit after tax for the first half was $12.3 million, significantly higher than the prior corresponding period.
• The construction materials segment showed improved results with a 40% increase in revenue for the concrete business.
• The composite fiber technology segment experienced a significant turnaround, delivering an EBIT result of $4.2 million compared to $1.3 million in the prior period.
• Strong operating cash flow enabled a debt reduction of $10.8 million and an increase in cash of $3.7 million, reducing net debt by $14.5 million.

Negative Points

• Revenue for the first half was down compared to the prior corresponding period due to the completion of a large precast tunnel project.
• The second half is expected to be impacted by downtime and costs associated with major maintenance shutdowns in the cement business.
• There are no major projects identified that will provide significant contribution in the remainder of FY25.
• The concrete business, while showing improvement, is still close to break-even with some plants not yet profitable.
• The company's project services area experienced reduced activity, reflecting the cyclical nature of large project work.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with ASX:WGN.

Q: Can the CFT business maintain its strong performance in the second half, and are there any risks with bespoke projects? A: (Cameron Coleman, Managing Director) We expect the CFT business to perform consistently with the first half. We have a strong order book for bespoke projects, all priced at satisfactory margins and low risk. The issues we faced in New Zealand are behind us, and we are optimistic about the contributions from our new power pole product line.

Q: Will the move to Ipswich for the precast business help win more large project work? A: (Cameron Coleman, Managing Director) The move to Ipswich is not preventing us from winning large projects. Currently, there are no large precast project opportunities available. The relocation is strategic, taking advantage of the current lull in large-scale construction activity.

Q: How have cement prices and volumes changed recently, and what is the outlook for quarry volumes? A: (Cameron Coleman, Managing Director) Cement pricing is moving in line with CPI, with stable volumes. We are seeing margin improvements due to better raw material costs and shipping rates. Quarry volumes are expected to grow as we expand our concrete plant network, leveraging our vertically integrated supply chain.

Q: What are the medium to long-term EBIT margin aspirations for the construction materials business? A: (Fergus Hume, CFO) We aim for EBIT growth, particularly by improving margins in the concrete business through operational efficiencies. While concrete is currently a lower-margin business, we expect improvements as we optimize operations.

Q: Can you provide an outlook for the CFT USA business and any future expansion plans? A: (Cameron Coleman, Managing Director) The CFT USA business has improved significantly with disciplined cost control and project delivery. We have a strong pipeline of low-risk, satisfactory-margin projects. We are excited about entering the electrical infrastructure market with our power poles, which presents a significant opportunity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.