SPC Global Posts 73% EBITDA Surge on Margin Strategy Despite Revenue Decline

SPC Global H1 FY26 Results: EBITDA Surges 73% as Profit-Focused Strategy Delivers

SPC Global Holdings has reported a 73% surge in normalised EBITDA for H1 FY26, reaching $13.0 million compared to $7.5 million in the prior corresponding period. The SPC Global H1 FY26 results mark the company’s first full reporting period since the December 2024 merger that created the combined group, validating management’s strategy of prioritising margin over volume. Net Sales Revenue (NSR) came in at $171.5 million, with full-year guidance reaffirmed for 25% EBITDA growth versus FY25.

Understanding EBITDA growth versus revenue decline

For investors new to analysing financial results, the SPC Global H1 FY26 results present an important lesson: revenue and profitability do not always move in the same direction. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) measures a company’s operational profitability, while revenue simply reflects total sales. A company can grow EBITDA while revenue declines if it deliberately exits low-margin business and focuses on higher-value products that generate better returns per dollar of sales.

SPC Global’s strategy illustrates this principle in action. The company intentionally reduced low-return private label volumes, which resulted in an estimated $16 million NSR decline year-on-year. However, this exit delivered a significant uplift in average margin, enabling EBITDA to surge despite the top-line contraction.

This signals a healthier, more sustainable earnings profile, as the company is generating stronger cash flow from a smaller but more profitable revenue base. For investors, this distinction is critical when evaluating business trajectory, particularly in turnaround or restructuring scenarios.

Domestic business powers ahead with 304% EBITDA growth

The domestic segment delivered the standout performance in the SPC Global H1 FY26 results, with normalised EBITDA of $10.5 million, representing a 304% increase year-on-year. This result was driven by a strategic shift toward branded products, which now comprise 77% of the sales mix, alongside disciplined promotional spend and a 12% simplification of the product range. The On-The-Go (OTG) channel grew 5% year-on-year, while Juice Lab Wellness Shots maintained its position as Australia’s number one shot brand, growing at 5.3 times the rate of the overall Chilled Juice and Drinks category.

Brand strength was further validated through retail support for Ardmona, which has been selected as the exclusive Australian-branded canned tomato offer within a major national retailer from May 2026. Beverage performance strengthened materially, with more than 1,500 incremental distribution points secured during the first half.

The domestic business is the earnings engine of the group, and margin improvement demonstrates pricing power and brand strength. The deliberate reduction of low-return private label volumes resulted in an estimated $16 million NSR decline year-on-year, but delivered a significant uplift in average margin, validating the strategy of prioritising profitability over volume.

Productivity gains compounding margin expansion

Supply chain efficiencies delivered measurable cost improvements across the domestic business during H1 FY26:

1. Cost of Goods Sold (COGS) per kilogram improved by 12.4%, driven by favourable fruit pricing, reduced waste and giveaway, recipe optimisation, procurement synergies and labour efficiencies achieved through improved line throughput.

2. Distribution costs per kilogram decreased by 11.9%, due to ambient freight benefits, improved freight utilisation and more precise management of pallet and goodpack requirements across the network.

3. Working capital intensity reduced, strengthening the financial resilience of the business and supporting cash conversion improvements.

These structural improvements should persist beyond H1, underpinning margin expansion as the business scales its higher-value branded and functional beverage platforms.

International segment repositioning for H2 recovery

The international business reported NSR of $15.9 million, down 42.4% year-on-year, reflecting two deliberate structural changes rather than demand weakness. The non-renewal of a low-margin manufacturing contract with Coles (replaced by a higher-value arrangement with Fonterra which commenced in November 2025) and the timing of major sales events in Hong Kong (one event in H1 FY26 versus two in the prior period) drove the revenue decline. Sales contribution margin improved to 50.3%, up 9.5 percentage points, demonstrating the quality of the portfolio transition.

Normalised EBITDA was $2.5 million, down 49%, but the phasing of major sales events in H2 FY26 is expected to recover EBITDA performance across the remainder of the financial year. The Fonterra contract commenced in November 2025, and new partnerships with Shanghai Pharma and Watsons Hong Kong are anticipated to contribute a combined export value of approximately $5 million over the next three years.

Growth pipeline across Asia

The international division has established a diversified pipeline of new channel and country expansion opportunities:

• Nature One dairy products: Specialised proteins to launch into China in Q4 FY26, alongside a planned relaunch of the GoKids range. Expected export value of approximately $10 million over the next three years. Distribution across the Shanghai Pharma pharmacy and hospital network, with initial ranging expected to commence in Q1 FY27. Nature One’s nutritional portfolio will also be distributed through Watsons Hong Kong.

• Beverage expansion: Original Beverage Co. and Juice Lab Wellness Shots entering major retail channels in Korea, Japan, Singapore and China, including Emart, NTUC FairPrice and Walmart (Sam’s Club). Combined export value anticipated at approximately $10 million over the next three years.

• Food expansion: SPC branded products gaining new ranging in China, entry into Qatar, and increased presence in Singapore. Expected export value of around $5 million over the next two to three years.

The international pipeline represents diversified geographic revenue streams and reduced reliance on Australian retail conditions, supporting medium-term earnings growth as these partnerships mature and scale.

Synergy delivery accelerating with Mill Park closure uplift

The synergy programme has delivered more than $16 million in benefits, to be realised across the remainder of FY26 and FY27. In H1 FY26, the group realised approximately $2.0 million in savings from selling, general and administrative (SG&A) efficiencies, alongside $3.5 million from procurement initiatives and a further $1.5 million from supply chain productivity improvements. Additional benefits included $1.0 million from non-labour SG&A reductions and $1.0 million from commercial cross-selling activities.

The Mill Park site transition has been re-engineered to deliver materially better economics than originally guided. Under a refined plan, the group will deliver greater than $8 million in annualised savings on capital expenditure of just under $3 million, with a complete payback period of less than 12 months, to be received in FY27. This compares favourably to the original February 2025 guidance of $4 million to $5 million in operational efficiency savings on capital expenditure of $23.5 million.

Robert Iervasi, Managing Director

“The foundations we have been establishing are already delivering tangible benefits: our growth across brands, channels and markets proves that the merger is unlocking synergies and accelerating our ability to grow domestically and internationally. Our focus is on laser sharp execution of our strategies, which can be seen through our H1 FY26 results.”

Synergy delivery is running ahead of guidance, de-risking the full-year target and supporting FY27 earnings momentum. The annualised outlook for FY27 and beyond is materially better, supported by an expanded pipeline of integration initiatives.

Balance sheet discipline supports FY26 outlook

Inventory management remained a key focus during H1 FY26, with inventory reduced to $108.9 million, down $28.7 million and meeting the group’s target of reducing consolidated inventory levels below $110 million. The company continues to target a 5% year-on-year reduction in inventory by 30 June 2026. Net debt increased by $14.9 million to $138.6 million, in line with expectations, with the net leverage ratio expected to remain below 4 times at 30 June 2026.

Borrowings increased by $16.1 million following the refinance with senior lender CBA, while current liabilities reduced in line with lower inventory levels and refinancing activities. The group reported net cash inflows of $1.2 million for H1 FY26, supported by the refinancing of senior facilities. Underlying operating cash flow of $3.7 million improved materially, driven by enhanced working capital management and operating efficiencies. Comparable interest expense savings of approximately $1.2 million were achieved.

Working capital discipline and refinancing savings improve cash conversion and reduce financing risk, providing a more stable capital structure to support growth investments and operational flexibility.

What SPC Global is targeting for the remainder of FY26

The group reaffirmed its full-year guidance, remaining on track to deliver key targets:

• 25% EBITDA growth versus FY25
• Synergy delivery progressing ahead of guidance
• Net leverage ratio target of less than 4 times at 30 June 2026
• Inventory reduction of 5% year-on-year by 30 June 2026

Management continues to implement initiatives to strengthen the group’s balance sheet, including improvements in the cash conversion cycle through renegotiated customer and supplier terms, focused inventory management and margin uplift across the retained product portfolio. In parallel, the group is actively assessing additional capital management strategies aimed at further reinforcing its financial position.

Guidance reaffirmation provides visibility for investors, while management commentary suggests upside optionality from capital management initiatives as the business continues to execute on its profit-focused strategy and integration roadmap.

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