Highlights

• Group sales rose 4.5% to $9.4 billion in FY2026, but Earnings moved in the opposite direction, with EBIT down 2.6% to $534 million and net profit easing to around $308 million.

• The ANZ division grew sales 8.3% to $4.2 billion and EBIT 6.1% to $360 million from a network of 678 branches, remaining the group's main profit contributor.

• US sales rose 6.5% in local currency to US$3.5 billion, though like-for-like sales fell 1.7% over the year before stabilising in the second half.

• US EBIT fell 13% to US$118 million as the Margin compressed to 3.4%, reflecting weak residential new construction.

• Reece opened 25 new US branches during the year, an above-normal pace of expansion pursued through the downturn.

• The board declared a fully franked final Dividend of 13.40 cents per share.

• The shares have de-rated over the past year as the market reassesses Reece's exposure to the US housing cycle.

Reece, the family-backed plumbing and bathroom supplies distributor that has expanded aggressively into the United States, has spent the past year on the wrong side of investor sentiment. Once prized for its defensive growth, the stock has de-rated as the market reprices its exposure to a soft American housing market. Its results for the year to 30 June 2026 told a tale of two geographies — a resilient home base offsetting margin pressure abroad — and sharpened the question of whether the quality compounder has quietly become a contrarian opportunity, or a value trap tied to the US building cycle.

Latest Developments

Reece lifted total sales Revenue 4.5 per cent to $9.4 billion, but earnings went backwards. EBITDA was broadly flat at $901 million, EBIT fell 2.6 per cent to $534 million, and net profit eased to around $308 million. Earnings Per Share were little changed at 49.5 cents, and return on Capital held at 11.9 per cent.

The board declared a final dividend of 13.40 cents per share, fully franked. The result laid bare the divergence within the business: the Australian and New Zealand operations powered ahead while the US arm absorbed the brunt of a subdued residential construction market.

A Tale of Two Markets

The ANZ business, Reece's profit engine, grew sales 8.3 per cent to $4.2 billion and lifted EBIT 6.1 per cent to $360 million from a network of 678 branches, underscoring its entrenched position in a market with limited direct competition.

The US told a harder story. Sales rose 6.5 per cent in local currency to US$3.5 billion, but like-for-like sales fell 1.7 per cent over the year before stabilising to broadly flat in the second half. EBIT dropped 13 per cent to US$118 million and the margin compressed to 3.4 per cent, as the group kept investing in new branches through the downturn. Management pointed to weak residential new construction while non-residential Demand held up better.

What Could Drive the Stock Next

The clearest swing Factor is the US housing cycle. Reece has said residential demand there is unlikely to turn until affordability improves, so any easing in US Mortgage rates or a pick-up in construction activity would flow through to the segment's operating leverage.

The counter-cyclical branch roll-out — 25 new US locations opened during the year, above the group's normal pace — positions Reece to capture share when demand recovers. In the meantime, ANZ's steady cash generation continues to fund the American expansion and cushion group earnings.

Key Risks to Watch

The US strategy is both the growth story and the primary risk. A prolonged American housing downturn would keep pressuring margins on an increasingly large slice of the business, and the aggressive branch expansion lifts costs ahead of a recovery that management concedes it cannot time.

Closer to home, the ANZ pipeline, while solid, is not immune to a softer domestic construction and renovation market. With the shares having already de-rated, the stock's direction hinges heavily on whether the US turn arrives sooner or later than the market fears.

Investor Takeaway

Reece's FY2026 result confirmed the pattern that has weighed on its shares: a dependable ANZ core carrying a US Business caught in a housing slump. The bull case rests on the long-term prize of scaling a proven distribution model across a vast American market; the bear case is that the downturn drags on and the premium once afforded the stock keeps eroding. For now, Reece sits squarely in contrarian territory, its fortunes tied to a housing recovery it can prepare for but not control.

This article is general information only and does not constitute financial or Investment advice.