Korvest (ASX:KOV) Reports 1H FY25 Results and Outlook
Financial Overview
Korvest (ASX:KOV) reported its financial results for the first half of FY25. The company faced challenges, including $670,000 in one-off costs due to a galvanising operational issue and EzyStrut product rectifications, which impacted profitability. The company’s sales for 1H FY25 totalled $51.13 million, slightly down from $51.71 million in the previous year. Earnings before interest and tax (EBIT) was $5.78 million, reflecting a significant decrease of 29.3% compared to $8.18 million in 1H FY24.
Net profit after tax (NPAT) also fell by 28.5%, amounting to $4.09 million. Despite these figures, Korvest generated strong operating cash flow of $7.12 million in 1H FY25.
Operational Performance
The first half experienced margin contraction and project phasing, affecting overall profitability. However, Korvest achieved a record order book, boosted by two new major projects anticipated to enhance revenue streams in the second half. Small project activity balanced the reduced major project revenue, with improved operational cash generation noted during the period.
The company highlighted that operational efficiency improvements, such as heat reclamation projects, contributed to better cost management, although higher costs in staff and logistics impacted margins.
Future Outlook
Looking ahead, Korvest expects a significant increase in major project activity based on customer delivery schedules. The company is optimistic that profit for FY25 will surpass the previous financial year’s outcomes. The commencement of two major projects sets a positive tone for the second half of the year, although revenue levels may fluctuate in response to broader economic conditions. The Dividend Reinvestment Plan (DRP) remains suspended for the interim dividend, with a record date of 14 February 2025 and payment set for 7 March 2025.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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