Having focused on consolidating their industrial products businesses, Coventry Group (ASX: CYG) is seeing strong synergies realised from their efforts with its earnings for FY24 expected to be substantially up from the previous year, even with just a modest jump in revenue.
Just a few days on from the end of FY24, Coventry Group’s preliminary data shows the Company is expecting FY24 sales revenue of $371.3 million which would be a 3.7% increase on the previous year, however EBITDA is projected to be $20.8 million, which is a more substantial jump of 22.4%.
“Initiatives to grow EBITDA % to Sales to 10% in the medium term have delivered positive results. These buy-side and sell-side initiatives have continued during the financial year, said Coventry Group CEO, Robert Bulluss.
Contributing to Coventry Group’s earnings growth has been the addition of Steelmasters which Coventry acquired in April 2024 for $42 million, bringing with it complementary services and supply chain infrastructure that has benefited Coventry’s other brands.
Coventry distributes industrial products and services throughout Australia and New Zealand. Each brand specialises in different sectors of the industrial market with their most recognised customer-facing brands being Konnect and Artia, Nubco, Cooper Fluid Systems, HIS Hose, Torque Industries, Apex Fenner, Steelmasters, Galvmasters and Boltmasters.
Beyond Steelmasters meeting all of it’s immediate expectations with just a few months of contribution, new store openings in Yatala, Queensland and Karratha, Western Australia have addressed demand for industrial products in their respective regions. Bouncing off the back of those successes, Coventry has flagged more store openings in FY25 to drive organic growth to continue leveraging their established supply chain and brand recognition.
The mining and resources sectors, particularly in Western Australia and Queensland, have shown strong demand, contributing positively to Coventry Group’s sales. However, some short-term softening is observed in other Australian states, and economic conditions in New Zealand remain challenging.
Upgrading Coventry’s Enterprise Resource Planning (ERP) has been instrumental in unlocking the value of their vertical integration capabilities with a pilot transition having taken place in their Fluid Systems business successfully transitioning to Microsoft 365. Plans are in place to extend this to the remaining Fluid Systems branches, followed by Konnect and Artia branches in both New Zealand and Australia which is on track to be completed by the end of FY24.
Coventry Group operates in multi-billion-dollar fragmented markets and currently holds modest market shares.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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