Highlights

  • Reece recorded a 4.5% increase in FY26 revenue, while net profit declined amid differing regional market conditions.
  • Australian and New Zealand operations benefited from recovering volumes and continued Investment in distribution capabilities.
  • US operations faced subdued residential construction Demand despite Revenue growth from branch expansion.
  • Operating cash inflows increased, while net Debt rose as the company continued funding Business development.

Reece (ASX:REH), an Australian-listed distributor of plumbing, bathroom, waterworks and heating, ventilation, air conditioning and refrigeration products, reported mixed financial performance for FY26, ended 30 June 2026. Revenue growth was supported by improving trading conditions in Australia and New Zealand and network expansion in the United States. However, Earnings declined as the US residential construction market remained subdued and operating expenditure increased.

FY26 Revenue Increased Despite Lower Earnings

Reece reported FY26 sales revenue of AUD 9,378 million, representing a 4.5% increase from AUD 8,978 million in FY25. On a constant-currency basis, revenue increased 7.3%, reflecting underlying business expansion across its operating regions.

Earnings before interest, tax, Depreciation and Amortisation (EBITDA) remained unchanged at AUD 901 million. Meanwhile, earnings before interest and tax (EBIT) declined 2.6% to AUD 534 million from AUD 548 million.

Net profit after tax decreased 2.8% to AUD 308 million, compared with AUD 317 million in FY25. However, Earnings Per Share increased 0.7% to 49.5 cents, reflecting changes in the weighted-average share count.

The divergence between revenue and profitability indicates that additional sales did not translate into higher overall operating earnings during FY26.

Australian and New Zealand Operations Support Revenue Growth

Reece (ASX:REH) recorded an 8.3% increase in Australia and New Zealand revenue to AUD 4,204 million in FY26, compared with AUD 3,882 million in FY25.

The improvement was supported by recovering sales volumes, although trading conditions varied across geographic markets. Inflation contributed approximately 2% to regional revenue growth.

Regional EBITDA increased 7.3% to AUD 532 million, while EBIT rose 6.1% to AUD 360 million from AUD 339 million.

The company ended FY26 with 678 branches across Australia and New Zealand. It continued investing in employee capabilities, digital initiatives, product availability and Customer Service infrastructure.

These investments support the company's distribution operations, although associated expenditure may influence operating margins as business development continues.

US Housing Conditions Continue to Affect Profitability

The US business experienced a different operating environment, with residential construction activity remaining subdued.

Revenue increased 6.5% to USD 3,511 million in FY26, compared with USD 3,296 million in FY25. However, like-for-like sales declined 1.7%, indicating that revenue growth was primarily supported by network expansion rather than comparable-branch growth.

Regional EBITDA declined 4.5% to USD 251 million, while EBIT decreased 13.0% to USD 118 million from USD 136 million.

Reece added a net 25 branches during the year, extending its US distribution network. Continued investment in branches, employee capabilities and digital operations contributed to expenditure while housing conditions constrained profitability.

Operating Cash Flow Improves While Net Debt Increases

Reece (ASX:REH) generated operating cash inflows of AUD 645 million in FY26, compared with AUD 600 million in FY25.

Capital expenditure decreased to AUD 174 million from AUD 258 million, with spending directed towards branch expansion and technology investments.

However, net debt increased to AUD 744 million from AUD 590 million, reflecting investment activities and partial funding of share buyback programmes.

The company's net Leverage Ratio stood at 1.0 times EBITDA at June 2026, compared with 0.8 times at June 2025.

Return on capital reached 11.9%, increasing five basis points from the previous year.

The board declared a fully franked final Dividend of 13.40 cents per share, bringing the FY26 total to 18.84 cents, compared with 18.36 cents in FY25.

FY27 Outlook and Operating Risks

Reece expects its Australian and New Zealand operations to benefit from an existing pipeline of activity during H1FY27.

However, housing affordability constraints and interest-rate sensitivity could influence future demand.

In the United States, residential new construction conditions remain challenging, although non-residential activity has demonstrated greater resilience.

Management anticipates modest US growth during FY27 while continuing to develop its distribution network and digital capabilities.

For Reece (ASX:REH), the principal operating risks include a prolonged downturn in residential construction, higher operating expenditure, pressure on distribution margins and fluctuations in currency translation.

Final Thoughts

Reece's FY26 performance reflects contrasting conditions across its major operating regions. Revenue growth in Australia and New Zealand supported group sales, while the subdued US housing market contributed to declining profitability.

Although operating cash inflows improved, higher net debt and continued expenditure remain important financial considerations. Future performance will depend on housing demand, branch productivity and operating cost management.