Technology companies serving defence and security markets can see sharp changes in demand. Codan Limited (ASX:CDA) released a trading update on 29 September 2026 with an updated H1 FY27 and full-year FY27 outlook.

Company overview

Codan Limited (ASX:CDA) has two main businesses: Communications, supplying radio and communications technology including for unmanned systems, and Minelab, which makes metal detectors.

Communications segment

Codan said on 20 August 2026 that unprecedented demand, mainly for unmanned systems, was driving order momentum. It now expects H1 FY27 Communications Revenue of A$400 million to A$410 million, compared with A$221.8 million in the prior corresponding period and A$506.2 million in all of FY26. Outside conflict regions, it expects revenue growth of about 20%.

Revenue from conflict regions is expected to be about 50% of Communications revenue in H1 FY27, compared with about 20% a year earlier, and EBIT Margin is expected to be about 40%, compared with 26% and 31% in FY26.

Minelab and Group

Minelab had a good start to H1 FY27, driven by the GPZ8000 and Gold Monster 2000 detectors, a favourable gold price and growth in Rest of World, with its run-rate slightly above H2 FY26. Codan expects Group NPAT for H1 FY27 of not less than A$160 million, against A$71.2 million in the prior period and A$175.2 million for the full year FY26. It continues to seek ways to mitigate Supply chain constraints.

Full-year outlook

Codan is targeting FY27 Communications revenue growth of 30% to 40%, above the earlier target of about 20%, while noting that order visibility in conflict regions is low and it is too early to say whether H1 Demand and margin will continue in H2.

Why the update was released

Codan said on 20 August 2026 that Communications demand was exceptionally high and that H1 FY27 revenue would significantly exceed the prior period. The 29 September update gives firmer numbers after Q1 trading and order intake strengthened, with visibility now through Q2 FY27.

Revenue expected for the Communications segment in H1 FY27 (A$400 million to A$410 million) approaches the A$506.2 million for the whole of FY26, which highlights the pace of orders described.

Margin and mix

Operating leverage from higher volumes is expected to lift H1 Communications EBIT margin to about 40% from 26% in the prior corresponding period. Because about half of Communications revenue is expected from conflict regions, the margin and revenue mix is unusual compared with the past, and Codan said it is too early to determine whether it will continue in H2.

Sector backdrop

Demand for unmanned systems and communications has risen with conflicts, and defence suppliers can see lumpy orders. Supply chains for electronic components can limit shipments.

Metal detector demand follows gold prices and product launches.

Codan’s update uses ranges and minimums rather than a single estimate, and states that Group NPAT for H1 FY27 is expected to be not less than A$160 million. That compares with A$175.2 million for all of FY26, so the first half alone is expected to be close to last year’s total.

Minelab’s revenue is described as slightly above H2 FY26 levels, so the growth in Earnings is concentrated in the Communications segment.

Defence and security communications suppliers have benefited from demand linked to conflicts and unmanned systems, but order visibility can be short. Component supply and production capacity can limit the pace of shipments.

Guidance statements use phrases such as “not less than” to indicate minimum expectations at the time.

Risks shareholders should weigh

Demand from conflict regions is hard to forecast beyond three months, and the company cautions that H2 may differ.

Supply chain constraints could limit shipments, and results depend on product mix.

Concentration of revenue in conflict regions raises geopolitical exposure.

The company explicitly cautions that conflict-region demand is difficult to forecast beyond three months.

If supply chain constraints delay shipments, revenue could shift between periods.

What’s next

Codan will report H1 FY27 results in due course. Shareholders may wish to watch for order updates and supply chain commentary.