Highlights

  • Reece reported FY26 sales Revenue of AUD 9.378 billion, up 4.5% from FY25.
  • EBITDA remained broadly flat at AUD 900.9 million, while EBIT declined 2.6% to AUD 533.7 million.
  • ANZ revenue increased 8.3% to AUD 4.204 billion as volumes improved across the region.
  • In the US, revenue increased 6.5% to USD 3.5 billion, supported by network expansion despite weak residential new construction.

Reece Limited (ASX:REH) operates one of the largest plumbing, waterworks and HVAC-R distribution networks across Australia, New Zealand and the United States. The group supplies products to commercial and residential customers through approximately 1,000 branches and employs around 9,000 people.

Its Business spans plumbing, bathrooms and kitchens, heating, ventilation, air conditioning and refrigeration, waterworks, irrigation, pools and fire-related products. This gives Reece exposure to a wide range of construction, maintenance and infrastructure activities rather than a single end market.

The company’s most recent substantive update came with its FY26 results released on 24 August 2026. The result showed higher group revenue and a recovery in Australian and New Zealand volumes, although Earnings remained under pressure from continued Investment and weaker US residential construction.

FY26 Performance

For the year ended 30 June 2026, Reece reported sales revenue of AUD 9.378 billion, representing growth of 4.5% from AUD 8.978 billion in FY25.

On a constant-currency basis, revenue increased 7.3% to AUD 9.630 billion.

EBITDA was broadly unchanged at AUD 900.9 million, while EBIT declined 2.6% to AUD 533.7 million from AUD 548.2 million. NPAT decreased 2.8% to AUD 308.2 million.

Earnings per share increased slightly by 0.7% to 49.5 cents, while return on Capital improved marginally to 11.9%.

The divergence between higher revenue and lower EBIT reflected continued spending on branch expansion, digital initiatives, technology transformation and employee programs.

Group costs excluding Depreciation and Amortisation increased 9.6% to AUD 1.820 billion during FY26.

The company declared a fully franked final Dividend of 13.40 cents per share, taking total FY26 dividends to 18.84 cents per share.

ANZ Recovery

Australia and New Zealand delivered the clearer improvement during FY26.

ANZ revenue increased 8.3% to AUD 4.204 billion from AUD 3.882 billion in FY25, driven by higher volumes.

The regional improvement followed a period of subdued housing conditions and suggests activity began to recover across parts of Reece’s customer base.

Reece’s ANZ operations cover several end markets, including residential plumbing, commercial construction, infrastructure, waterworks and HVAC-R. This broad customer mix can provide some Diversification when individual construction categories weaken.

The company also continued investing in customer experience and product innovation. During FY26, it opened a next-generation bathroom showroom in Sydney and increased adoption of artificial intelligence tools across the business.

For investors, the key issue is whether higher volumes can translate into stronger Operating Leverage if market conditions continue to improve.

Housing affordability and construction activity remain relevant, but Reece’s exposure to maintenance, renovation, infrastructure and commercial Demand provides additional sources of activity beyond new residential construction.

US Expansion

The United States remains central to Reece’s Long-term Growth strategy.

US revenue increased 6.5% to USD 3.5 billion in FY26, primarily supported by continued branch expansion. However, residential new construction remained weak, limiting underlying market growth.

Since entering the US in 2018, Reece has expanded significantly and added 121 branches through FY26.

During FY26 alone, the group opened a net 25 new US branches.

The strategy is based on increasing network density, broadening customer relationships and building scale in large plumbing, waterworks and HVAC-R markets.

This expansion requires upfront expenditure on branches, inventory, people and technology, which can weigh on earnings before new locations reach mature productivity levels.

Management has nevertheless maintained a long-term approach, arguing that US market fundamentals remain attractive due to population growth, ageing housing stock and ongoing infrastructure investment.

The key challenge is timing. Reece needs to continue investing without allowing the current weakness in residential demand to undermine returns on new capacity.

Digital Investment

Technology and digital capability remain another major focus for Reece.

The group has been investing in digital tools intended to make ordering, product discovery and customer interactions more efficient across both branches and online channels.

Management’s 2030 vision is centred on becoming the trade’s most valuable partner by being easy to do business with “in every branch, on every screen, every day.”

That objective reflects the increasingly integrated nature of industrial distribution. Trade customers still rely heavily on branch availability and technical expertise, but they also expect digital ordering, visibility of stock and faster service.

Reece is also adopting artificial intelligence tools across its operations, creating opportunities around employee productivity, Customer Service and internal processes.

The near-term challenge is that these investments increase operating expenses and depreciation before the full productivity benefits emerge.

Investors will therefore be watching whether digital investment gradually improves cost efficiency and customer retention.

Capital Position

Reece continued to invest while maintaining a relatively conservative capital structure.

Net Debt increased during FY26 as the company funded capital expenditure, network growth and Shareholder returns.

At HY26, net debt had risen to AUD 1.0 billion and net leverage stood at 1.5 times. The company nevertheless described the group as well capitalised and capable of continuing to invest through the cycle.

During the first half, Reece returned AUD 401 million of surplus capital through share buy-back programs.

Capital allocation remains particularly important given the group’s growth strategy.

Reece needs to balance branch expansion, technology spending, dividends and shareholder returns while preserving capacity for future growth opportunities.

Its long-term investment approach suggests management is willing to accept some near-term earnings pressure where it believes expenditure can strengthen the network over time.

FY27 Focus

For Reece (ASX:REH), FY27 is likely to centre on the contrast between improving ANZ activity and softer US residential markets.

In ANZ, investors will monitor whether Volume growth continues and whether stronger sales begin translating into improved margins.

In the US, branch productivity will be an important measure. The network has expanded rapidly, so improving returns from newer locations will be key to supporting future earnings.

Cost growth is another consideration. FY26 showed that revenue growth can be offset when network investment and operating expenses rise faster than gross profit.

Reece’s digital and technology initiatives therefore need to generate tangible productivity benefits over time.

The broader construction environment will also remain important. Population growth, infrastructure investment and ageing housing stock support long-term demand, but housing cycles can materially affect shorter-term performance.

Final Takeaway

Reece’s FY26 result showed a business continuing to invest through a mixed construction environment.

Sales revenue increased 4.5% to AUD 9.378 billion as ANZ volumes recovered and US network expansion supported growth. However, EBITDA remained flat at AUD 900.9 million and EBIT declined 2.6% to AUD 533.7 million as investment and higher costs affected profitability.

For Reece (ASX:REH), the next phase will depend on converting that investment into stronger operating leverage.

ANZ recovery, US branch productivity, digital execution and cost discipline will remain key areas to monitor as the group pursues its longer-term 2030 growth strategy.