Key Highlights

  • SCEE Group (ASX:SXE) increased Underlying EBITDA 40.5% to $77.0 million and Underlying EBIT 40.3% to $64.4 million in FY26.
  • Underlying NPAT rose 24.3% to $39.4 million, while statutory NPAT fell 77.6% to $7.1 million after $46.1 million of WestConnex dispute-related costs.
  • The group ended FY26 with a record $261.5 million cash balance and no debt, while its order book increased 18.2% to a record $810 million.
  • SCEE expects FY27 EBITDA of at least $100 million, supported by data centre, infrastructure, battery and energy-transition projects.

Southern Cross Electrical Engineering (ASX:SXE) reported record underlying profitability for FY26, with growth across its commercial and infrastructure activities and an increasing contribution from adjacent disciplines.

Revenue declined 10.3% to $718.7 million from the record $801.5 million in FY25. The decrease reflected the completion of the Collie Battery Energy Storage System and Western Sydney International Airport Terminal projects during the first half.

Despite lower revenue, Gross Profit increased 29.1% to a record $136.7 million, with the gross Margin improving to 19.0% from 13.2%. SCEE attributed the margin improvement to the outcome on the CBESS project, the contribution from Force Fire and a more favourable project mix.

Underlying EBITDA increased 40.5% to $77.0 million, while Underlying EBIT rose 40.3% to $64.4 million.

Underlying NPAT Rises Despite Statutory Profit Decline

Underlying NPAT increased 24.3% to $39.4 million from $31.7 million. However, statutory NPAT fell 77.6% to $7.1 million.

The difference was primarily caused by costs associated with the WestConnex arbitration. SCEE paid $25.3 million to settle the proceedings and wrote off a $19.5 million contract asset. Legal fees added another $1.4 million, resulting in combined dispute costs of $46.1 million.

These costs were excluded from the company's underlying Earnings measures. Underlying NPAT also included a $4.4 million expense related to the remeasurement of share-based payments following a 166% increase in the company's share price during FY26.

Commercial Growth Offsets Infrastructure Revenue Decline

Commercial revenue increased 62.1% to $247.2 million, supported particularly by Force Fire's industrial Warehousing and commercial building projects. Other contributors included work for Coles and Woolworths through SJ Electric and projects undertaken by Heyday across New South Wales and the ACT.

Infrastructure revenue, by contrast, fell 29.6% to $360.0 million following the completion of major CBESS and Western Sydney International Airport Terminal work. Current infrastructure projects include NEXTDC SYD03, DigiCo SYD1, Shoalhaven Hospital and additional Western Sydney International Airport works.

Resources revenue decreased 18.9% to $111.5 million.

More than 40% of FY26 revenue came from adjacent non-electrical disciplines including fire, manufacturing, security and communications, highlighting the increasing Diversification of the group's operating base.

Cash Balance and Order Book Reach Records

SCEE ended FY26 with $261.5 million in cash, compared with $88.6 million a year earlier. The increase was supported by cash conversion from EBITDA, Working Capital Management and a $144.7 million net Equity raising.

The company remained Debt free at year-end. Financing facilities were also expanded, including higher bank guarantee and surety bond capacity and new $50 million revolving Credit and Acquisition facilities.

The order book reached a record $810 million, up 18.2% from the prior year. Infrastructure represented 70% of the order book, while more than 85% was located on the East Coast and approximately 30% related to adjacent non-electrical disciplines.

Data Centres and Energy Transition Support Outlook

Data centres are becoming an increasingly significant source of future activity. SCEE generated $120 million of data centre revenue in FY26 and expects that figure to triple in FY27.

The company is working across multiple data centre projects for hyperscale cloud providers, with recent work including NEXTDC's S4 facility. SCEE is also tendering for additional large-scale opportunities.

Energy transition projects provide another growth channel. The company has experience across solar, wind and battery storage projects, including the completed $250 million-plus CBESS project. SCEE has also commenced work on the Steel River East battery energy storage project and is pursuing further renewable energy opportunities.

FY27 Earnings Guidance

SCEE has provided FY27 EBITDA guidance of at least $100 million, representing growth of at least 30% from FY26 Underlying EBITDA. Management expects further growth beyond FY27 through both organic expansion and acquisitions.

The group is actively assessing acquisition opportunities that could expand geographic coverage and add capabilities such as high-voltage work, powerlines and mechanical services.

Conclusion

SCEE's FY26 results showed a substantial increase in underlying profitability despite a 10.3% decline in revenue following the completion of major projects. Underlying EBITDA rose 40.5%, Underlying NPAT increased 24.3%, cash reached a record $261.5 million and the order book expanded 18.2%. Statutory NPAT was significantly lower because of $46.1 million in WestConnex dispute-related costs, an important negative Factor alongside the reported underlying gains. Looking ahead, SCEE is targeting at least $100 million of EBITDA in FY27, with data centres, infrastructure, battery projects and acquisitions forming key components of its stated growth program.