Specialised industrial products provider Coventry Group (ASX: CYG) has announced notable financial results for the first half of FY24. Its group sales reached $185.3 million, reflecting a substantial 5.4% increase from the prior year. Unaudited EBITDA also demonstrated significant growth, rising by 18.1% to $9.8 million.

These results are aligned with last month’s forecasted figures—H1 FY24 sales of around $185.5 million, up approximately 5.5% from H1 FY23, and unaudited pre-AASB16 EBITDA of $9.8 million, up about 18.0% from H1 FY23. This shines a light on the relative stability of the Company’s performance. 

Despite the seasonal dip in December and January, typical for the construction industry’s slowdown during the Summer break, Coventry remained resilient.

Group CEO and Managing Director of Coventry Group, Robert Bulluss, said, “The Group delivered solid H1 FY24 sales and unaudited EBITDA growth. Initiatives to grow EBITDA % to Sales to 10% in the medium term have delivered positive results. These buy-side and sell-side initiatives were implemented early in the financial year. The run-rate from these initiatives continued to improve in the December quarter with Q2 EBITDA up +28.9% on the pcp.”

Q1 FY24 saw sales of $94.6 million, up 6.1% from the prior year, and unaudited EBITDA of $5.4 million, showing a robust 10.8% increase. Bulluss reassured stakeholders by highlighting the demand in the primary end markets in Australia, including mining and resources, infrastructure, commercial construction, and industrial sectors.

While the New Zealand operations faced short-term challenges due to the recessionary environment, Coventry Group remains optimistic about its strategy built on specialisation and service excellence.

Established in 1929, Coventry Group operates in multi-billion-dollar fragmented markets, with plans to expand its market share through new branch openings, refurbishments, business development, product range expansion, and intensified sales and marketing efforts.

Over the next decade, it is set to benefit from the $100 billion in government spending on infrastructure that has been set aside. This also complements its planned network expansion involving two new New Zealand Trade stores, Fluid Systems branches in new geographical regions and Nubco expansion into regional Australia. 

During Covid, when most companies saw an EBITDA decline, Coventry kicked off its upward growth trajectory, recording earnings of $17 million in FY23. 

The Board and management want to leverage the scale benefits of the platform established over recent years in all parts of our business. In particular, the Company’s goal is to achieve best in-class trade distribution margins over time and to that end, it is implementing a range of identified improvement opportunities. 

For instance, the ongoing ERP upgrade aligns with Coventry’s commitment to technological advancement and is progressing according to plan, with the first branch pilot set for completion in March 2024 and the overall project aiming for conclusion by December 2024.

Given continuing market uncertainty, Coventry will not be providing FY24 guidance but will continue to provide quarterly trading updates to the market.