Adrad Holdings has reported underlying net profit after tax of $3.4 million for the half-year ended 31 December 2025, representing a 20% increase on the prior corresponding period. The Adrad Holdings Half Year Results (ASX: AHL) reveal margin recovery following a leadership restructure and cost optimisation programme implemented during the period, with underlying EBITDA rising 13.0% to $9.4 million on revenue of $77.4 million (up 0.6%).
The improved earnings performance reflects early benefits from organisational changes designed to position the group for scalable growth across data centre, power generation and industrial infrastructure markets. Statutory NPAT of $2.6 million was impacted by approximately $1.1 million in non-recurring corporate restructuring costs incurred during the half.
Heat Transfer Solutions segment drives earnings momentum
The Heat Transfer Solutions (HTS) segment delivered strong operating performance, with revenue increasing 3.6% to $45.2 million and underlying EBITDA rising 36.7% to $6.6 million. Growth was supported by power generation projects, improving off-highway volumes and manufacturing efficiency initiatives implemented across the group’s Australian and Thai facilities.
The segment recently secured an additional data centre order valued at approximately $17 million, with units to be manufactured at the Lara and Gillman facilities. Production capacity at the Lara site has doubled to meet increasing order book demand for data centre cooling systems.
| HTS Segment | 1HFY26 ($m) | 1HFY25 ($m) | Change (%) |
|---|---|---|---|
| Revenue | 45.2 | 43.6 | 3.6% |
| EBITDA | 6.1 | 4.8 | 25.9% |
| Underlying EBITDA | 6.6 | 4.8 | 36.7% |
What are heat transfer solutions and why do data centres need them?
Heat transfer solutions are specialised cooling systems designed for industrial equipment, engines and large-scale facilities. These systems transfer heat away from critical components to prevent overheating and maintain operational efficiency.
Data centres house thousands of high-performance servers that generate significant heat during continuous operation. Without effective cooling, server performance degrades and hardware failures increase. Adrad’s HTS division designs and manufactures these cooling systems, positioning the group to capture demand from Australia’s expanding data centre infrastructure as digital services and cloud computing requirements grow.
Distribution segment stabilises with growth initiatives underway
The Distribution segment reported revenue of $32.2 million (down 3.5%) and underlying EBITDA of $2.8 million (down 14.0%) as management changes and structural improvements were implemented across the business. The segment remains a cash-generative platform supporting group investment in higher-growth HTS markets.
Key initiatives implemented during the half include:
- Establishment of a specialist business development team focused on trade customers
- Trade customer base growth of 4.8%
- New branch opening as part of network expansion
- Supplier cost reductions achieved to support competitive pricing
- Enhanced inventory availability and product range expansion
Management expects these initiatives to deliver improved performance in the second half of FY26, with early signs of revenue improvement evident in late first half trading.
Interim dividend declared and outlook strengthens
The directors have declared a fully franked interim dividend of 1.45 cents per share, representing approximately 45% of statutory NPAT. The dividend has a record date of 19 March 2026 and will be paid on 9 April 2026.
Outlook Statement
Following the completion of leadership and cost structure optimisation in 1HFY26, the Group is positioned to deliver profitable growth aligned with structural demand across its core HTS end markets. The Group expects to realise further benefits from the restructuring through 2HFY26 as operating efficiencies are embedded and project execution and order book conversion continue to improve.
The HTS order book has strengthened, particularly across data centre and power generation activity, with the group continuing to build its pipeline of opportunities across industrial and infrastructure end markets. Management will maintain disciplined capital allocation while evaluating value-accretive acquisition opportunities that strengthen capability, market position and customer reach.
Operating cash flow of $6.3 million supported working capital investment of approximately $3 million in inventory to meet data centre project requirements and Distribution network expansion. The underlying cash conversion ratio was 80% for the half.
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