Redox (ASX:RDX) executives told investors the company delivered first-half FY2026 growth despite what management described as a “subdued global demand backdrop,” supported by acquisitions, segment mix, and continued momentum in North America.
First-half performance highlights
Chief Executive Officer and Managing Director Raimond Coneliano said Redox grew sales 6.6% year over year to AUD 674 million, citing contributions from recently acquired businesses and “particularly strong outcomes” in industrial and food, as well as North America. Gross profit increased 5.9% to AUD 145 million, while gross margin held at 21.5%.
On capital returns and shareholder distributions, management reported pro forma earnings per share of AUD 0.083, up 8.9% from the prior corresponding period, and after-tax return on invested capital of 14%, up 0.5 percentage points. The board declared an interim dividend of AUD 0.065 per share, representing a 78% payout of NPAT and within the company’s stated 60%–80% target range. CFO Kim Yap said the dividend will be paid on March 25.
Segment and regional drivers
Discussing revenue drivers, Coneliano said acquisitions and market share gains offset softer underlying demand. He noted industrial sales rose 29%, largely due to the contribution from Molekulis (a distributor of transformer oils), demand tied to power generation and transmission, and “significant customer wins in North America.” Food sales also increased, supported by new customer conversions and “share of wallet” wins.
However, the human health and nutrition segment declined in the half, which management attributed to softer demand in New Zealand. Coneliano said Redox’s breadth helps in uneven demand environments, where softness in one segment can be offset by strength in others.
Management emphasized that pricing remained broadly stable in the half, with growth driven by volume, product mix, and acquisitions rather than inflation.
On the regional split, Yap said Australian and New Zealand sales were 5% higher than the prior period, calling it a solid result given softer demand conditions in certain areas—particularly New Zealand human health. North America’s growth “improved sharply” in the first half, which she attributed to expansion into new industry sectors and additional active products.
Costs, cash flow, and balance sheet
Yap reported underlying EBITDA (FX) increased 4.7% to AUD 65 million, with costs “well controlled relative to revenue growth.” Underlying operating expenses rose AUD 6 million to AUD 85.8 million, driven by volume-linked expenses and higher administration costs that were primarily staff-related. She also pointed to AUD 2.4 million of “other expenses” tied to additional warehouse lease amortization and higher tax, climate reporting, and compliance costs.
Cash generation was a key theme in the briefing. Yap said cash flow from operations increased AUD 50.2 million to AUD 62.2 million. Free cash flow conversion rose to 91.4% from 19.7% in the prior corresponding period, which she attributed to timing of incoming shipments resulting in lower inventory. Yap cautioned that the level of conversion was above the normal range due to timing, but said it demonstrated the business’s inherent cash generation.
Redox ended the half with AUD 145 million in net cash and zero net debt. Coneliano and Yap both said the balance sheet provides capacity to pursue strategic M&A, as well as organic growth.
North America: wins, opportunities, and variability
In Q&A, UBS’s Vignesh Nair asked about the strength of the U.S. business and the repeatability of performance. Coneliano said the U.S. business has been growing “in fits and spurts,” which he attributed to its lower maturity, and argued it should become more predictable over time. He cited broad-based progress across industrial, personal care, and food.
Coneliano shared an example of a product used to de-ice airplanes, saying Redox held a large proportion of the Australian and New Zealand market for the product but found a “huge market” in the U.S., leading to a major customer win after a short sales cycle. He said the company continues to see significant opportunity in the U.S., including through potential acquisitions that could help the business mature faster.
M&A approach, pricing outlook, and tariffs
On acquisitions, Coneliano said Redox has a “very full pipeline” in the U.S. but stressed a disciplined process that prioritizes cultural fit and sustainable earnings, and avoids rushing deals. He told investors the company is hoping to execute “something in the next 12 months,” but did not provide a more specific timeline.
Asked about pricing in the second half amid inflation, Coneliano said supply-and-demand dynamics will be important, pointing to capacity closures and plant shutdowns—particularly in Europe, as well as in Southeast and North Asia. With prices stable for an extended period, he said he believes “the only way is up” and that there is more upward pricing pressure from manufacturers than downward pressure.
In response to investor questions about tariffs, Coneliano described tariff volatility as “unhelpful.” While he said the U.S. business is growing despite the changes, he noted tariffs can make customers more cautious with ordering as they wait for potential changes, and they make it harder to assess competitive positioning in U.S. acquisition targets. He said the business community would benefit from more certainty.
Other Q&A items included headcount additions—some through acquisitions and some through organic growth—spread across the company in the U.S., Australia, and elsewhere. Coneliano also said North America’s growth reflected both new customer wins and increased share of wallet, though he did not provide a split. In response to a question on growth mix, he said total growth was about 60/40 organic to inorganic, and noted Molekulis may have contributed about AUD 17 million during the half.
About Redox (ASX:RDX)
Redox Limited supplies and distributes chemicals, ingredients, and raw materials in Australia, New Zealand, the United States, and internationally. It offers antioxidants, proteins and fibres, leaving agents, acidity regulator, sweeteners, thickeners, stabilisers and gums, vitamins, amino acids, mineral salts, preservatives, phosphates, humectants, essential and vegetable oils, herb and spice extracts, natural colours, emulsifier, dairy products, wine and brewing, cleaning and sanitation, specialities, additives, emollients, emulsifiers, hair care, solvents, sunscreens, surfactants, thickeners, vegetable oils, processing aids and fining, cleaning and sanitation, waxes and fatty acids, and functional products.
