Highlights

  • Korvest H1 FY2026 revenue from trading operations rose 17.9% to AUD 60.3 million.
  • Profit before tax increased 33.2% to AUD 5.4 million, aided by lease termination gain.
  • Interim fully franked dividend declared at 25 cents per share, record date 13 Feb 2026.

Korvest Ltd (ASX:KOV) shares closed at AUD 14.67 on 23 January, up 2.59% or AUD 0.37 following the release of its first half FY2026 results. The company reported revenue growth across its trading operations, supported by increased industrial project activity, and an improvement in profit before tax despite some one-off costs.

Revenue Growth Driven by Industrial Products
Revenue from trading operations climbed 17.9% to AUD 60.3 million compared to the prior comparative period (PCP), primarily due to higher sales in the Industrial Products segment. The EzyStrut product line saw a 19.3% revenue increase, with gains across all channels. Major projects contributed significantly, with three projects underway in H1 FY2026 compared to only one in the PCP. Small project markets also recorded growth in most states.

Branch network costs increased with higher headcount and annual salary adjustments. The Queensland branch relocated to a larger site in December, resulting in one-off moving costs and increased rent expenses for overlapping leases.

Profitability Improves Amid One-Off Adjustments
Profit before tax rose 33.2% to AUD 5.4 million, partly supported by a AUD 163k accounting gain from an unexercised lease extension option. This gain was partially offset by AUD 566k in engineering claim costs related to a third-party design fault, bringing total related costs to AUD 1.435 million. Recovery of a significant portion of these costs is anticipated but not guaranteed.

Production and Cost Trends
The Galvanising business saw improved plant volumes compared to the PCP but did not match FY25 H2 levels. Rising zinc prices were partially offset by earlier forward purchases made at lower rates. Labor costs increased faster than production volumes as capacity was built for a major project delayed into the second half.

Capital Expenditure and Operational Upgrades
Capital expenditure reached record levels during H1 FY2026. The Kilburn site redevelopment commenced in October 2025, with AUD 1.5 million spent in phase one. The EzyStrut transport fleet added five new trucks, and the Queensland branch relocation supports higher stock capacity.

Galvanising operations underwent a major Christmas shutdown, including the replacement of the main galvanising kettle and installation of a burner management system. These upgrades are expected to improve operational efficiency in H2 FY2026.

Dividend and Outlook
Korvest declared a fully franked interim dividend of 25 cents per share, with a record date of 13 February 2026 and payment date of 6 March 2026. The Dividend Reinvestment Plan (DRP) will not apply.

The company expects continued major project activity in H2 FY2026, with two new infrastructure projects commencing. Galvanising volumes are likely to increase with the processing of a large project, and operational efficiency improvements are expected to enhance profitability. Korvest enters H2 with a substantial order book, projecting H2 revenue to surpass H1 results, although not reaching FY25 record levels.