Highlights

  • Codan (ASX:CDA) now expects 1HFY27 NPAT of not less than $162 million, compared with $71.2 million in 1HFY26.
  • Communications 1HFY27 revenue is expected at $410 million to $420 million, with an EBIT margin in the order of 40%.
  • FY26 revenue rose 30% to $875.0 million and NPAT increased 69% to $175.2 million.
  • Full-year FY26 dividends totalled 48.5 cents per share, fully franked, up 70%.

Codan is a technology company that develops solutions for communications, safety, security and productivity challenges in harsh environments, operating through its DTC, Zetron and Minelab businesses.

Company Business

Codan reports two main segments. Communications includes DTC, which supplies unmanned systems and tactical communications technology to defence and security customers, and Zetron, which provides mission-critical communications for public safety and emergency services. Metal Detection operates under the Minelab brand, supplying detectors for recreational users, gold prospectors and countermine applications. Headquartered in Mawson Lakes, South Australia, the group employs more than 1,100 people. Codan invested about $78 million in engineering during FY26, equal to around 9% of group revenue, with focus areas including multi-waveform radios and AI-enabled soldier systems.

Recent Development

At its Annual General Meeting on 20 October 2026, ASX:CDA upgraded its first-half FY27 outlook for the second time in about a month. The company now expects the Communications segment to deliver 1HFY27 revenue of $410 million to $420 million, up from the $400 million to $410 million range issued in late September, and compared with $221.8 million in 1HFY26. The segment EBIT margin is expected to be in the order of 40%, against 26% in the prior corresponding half. Group NPAT for the half is expected to be not less than $162 million, subject to final product mix and shipments.

Chief Executive Alf Ianniello said the company is seeing "unprecedented levels and pace of demand for unmanned systems in conflict areas." Conflict regions were expected to account for about 50% of Communications revenue in the half, while revenue outside those regions is expected to grow by more than 20%. Codan now targets FY27 Communications revenue growth at the upper end of a 30% to 40% range versus FY26. DTC also secured its first orders for BluSDR radios into multiple United States military programs of record.

In July 2026, Codan completed the acquisition of Adaptive Dynamics, a United States engineering business focused on anti-jamming and interference mitigation, which is being integrated into DTC.

Financial Performance and Sector Context

The FY26 result, released in late August 2026, showed revenue of $875.0 million, up 30%. EBITDA was $288.9 million. EBIT rose 67% to $244.1 million, lifting the EBIT margin to 27.9%, with EBIT and NPAT finishing slightly above the guidance issued in late April 2026, while NPAT increased 69% to $175.2 million and earnings per share reached 96.5 cents. Total dividends for the year were 48.5 cents per share fully franked, comprising an interim of 19.5 cents and a final of 29.0 cents.

Communications revenue grew 22% to $506.2 million, with segment profit up 45% to $156.0 million at a 31% margin. Defence represented 58% of segment revenue, and unmanned revenue roughly doubled to about $215 million. The Communications orderbook stood at $380 million, up 50%. Metal Detection revenue rose 42% to $362.0 million, with segment profit up 65% to $162.4 million at a 45% margin. Minelab's Africa revenue increased 60% to about $184 million, supported by four product launches, including the GPZ 8000 and Gold Monster 2000.

Codan finished FY26 with net cash of $35.7 million and an undrawn $250 million debt facility, plus a $150 million accordion subject to bank approval. Within the industrials sector, ASX:CDA has increased its exposure to defence and unmanned technology, a shift reflected in the segment mix.

Risks to Consider

Management has stated that order visibility in conflict regions is low, and that it is too early to determine whether elevated demand and first-half margins will continue into the second half. A higher share of revenue tied to conflict regions increases sensitivity to geopolitical developments and government procurement decisions. Minelab's results can be influenced by gold prices and demand in Africa. Codan has also noted emerging constraints in global electronics supply chains. Integrating Adaptive Dynamics carries execution risk, and the company has indicated its capital structure may evolve to fund larger acquisitions.

What to Watch Next

Codan's half-year results for the six months to December 2026 will show whether Communications revenue lands within the $410 million to $420 million range and whether group NPAT meets the minimum of $162 million. Investors in ASX:CDA may also follow order intake in conflict and non-conflict regions, Minelab's revenue run-rate, which was tracking slightly above second-half FY26 levels, further BluSDR orders, progress integrating Adaptive Dynamics and any use of the debt facility for acquisitions.

Key Insights

Codan delivered higher revenue, earnings and dividends in FY26, led by defence-related Communications sales and gold-related Minelab demand. Two upgrades to first-half FY27 guidance within about a month point to elevated order activity, although management has flagged limited visibility beyond the near term. The balance sheet holds net cash with undrawn facilities available.