In This Article:
Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Codan Ltd (ASX:CDA) reported a 15% increase in revenue to approximately $306 million for the first half of FY25.
-
The communications segment was a key driver, with a 22% revenue increase, exceeding the 10-15% growth target.
-
The company declared a fully franked interim dividend of 12.05 cents per share.
-
Codan Ltd (ASX:CDA) has maintained a net debt to EBITDA ratio of less than 1, showcasing financial discipline.
-
The acquisition of CagWorks is expected to generate $49 million to $57 million in revenue and $8 million to $11 million in EBITDA in the first 12 months of ownership.
Negative Points
-
Net debt increased by $48 million to $124 million at the end of December, partly due to acquisitions.
-
The metal detection business only grew revenues by 5%, which is lower compared to the communications segment.
-
The Countermine division experienced a decline due to the absence of large humanitarian orders that were present in the previous year.
-
Expenses increased due to the integration of acquisitions, with $2 million incurred in integration and acquisition expenses.
-
The geopolitical situation in Ukraine presents uncertainty, although current sales are not reliant on US funding.
Q & A Highlights
Q: You've increased your debt capacity and continue to seek acquisitions. Can you elaborate on your focus areas and whether these businesses are domestic or offshore? A: We are focused on acquisitions in communications, predominantly in North America, where the largest addressable markets exist. CEO Alf Ianello
Q: You continue to target 30% margins in the communication segment over the next 2 to 3 years. How do you plan to achieve this? A: The movement from 25% to 27% in the half was positive. Growth and investment in the right areas are key. As we grow and control costs, we expect to progress towards a 30% contribution margin. CEO Alf Ianello
Q: Regarding the order book, how should we think about the phasing of that order book to revenue over the next 12 to 18 months? A: A lot of the tactical conversion book gets converted into H2. The order book for Zettron is spread over 3 to 10 years, with the bulk under 18 months due to large programs. CEO Alf Ianello
Q: Can you provide more color on the new products expected from Minelab over the next 12 to 18 months? A: We have 2 gold detectors, 2 recreational detectors, and 2 countermine detectors coming out. These are leapfrog technologies, with significant performance improvements expected. CEO Alf Ianello