Ive Group Ltd Posts FY26 Margin Expansion and Higher Dividend

IVE Group delivers margin expansion and higher dividend in FY26 despite softer revenue

In its FY26 full-year results presentation, IVE Group reported growth in earnings and margins for the year ended 30 June 2026, lifting its final dividend even as revenue eased slightly in a difficult economic environment. The company describes itself as Australia’s largest diversified marketing company.

Underlying EBITDA (pre-AASB 16) rose 2.8% to $112.6m, while NPAT (pre-AASB 16) increased 3.0% to $52.5m, delivered against revenue of $937.4m, down 1.8% on the prior comparative period.

Margin expansion drove the result. Material gross profit margin lifted to 51.4% from 49.3%, more than offsetting the softer top line. Management noted the outcome was consistent with guidance.

The Board declared a fully franked final dividend of 9.0¢ per share, up 5.9%, bringing full-year dividends per share to 18.5¢. Revenue softness was concentrated in catalogues and publishing, reflecting the broader economic landscape.

For investors, earnings growth despite top-line pressure points to operating leverage and the benefits of increasing scale.

FY26 financial performance at a glance

The table below summarises the key metrics IVE Group presented for FY26, shown on both the underlying pre-AASB 16 and statutory IFRS bases.

The 19.8% decline in IFRS NPAT was driven by higher non-operating items totalling $20.4m pre-tax, which included restructure and relocation costs from the site consolidations, rather than underlying trading weakness.

Management pointed to several underlying drivers of the result:

• Material gross profit margin uplift from improved buying power as scale increases, plus business mix changes.

• Strong performances from the CX & Data, Premiums & Merchandise and 3PL segments.

• New client wins including Bunnings, Mirvac, Subway, Nestlé, PepsiCo, Arnott’s and Domino’s.

Understanding pre-AASB 16 vs IFRS results

AASB 16 is a lease accounting standard that replaces cash rent expense with non-cash depreciation and interest charges. This creates timing differences that reverse over the life of a lease.

IVE reports an “underlying pre-AASB 16” figure to strip out these non-cash lease timing impacts and present its cash earnings. According to Appendix C of the presentation, the cumulative profit and loss impact of these lease adjustments is nil over the life of the leases, meaning it is a timing difference rather than a real loss.

For investors, this framing helps read past the 19.8% IFRS NPAT drop and focus instead on the 3.0% underlying earnings growth.

Major site consolidations position IVE for growth

During FY26, IVE progressed several major property consolidations designed to reduce costs and add capacity.

The Kemps Creek supersite in Western Sydney relocated five business units into a single 42,000m² facility, becoming fully operational in Q4 FY26. The company expects the site to avoid an additional $3.1m per annum in rental cost increases, alongside broader operating efficiencies. The NSW packaging facility became fully operational in May 2026.

The five business units consolidated at Kemps Creek were:

1. Print NSW

2. Brand Activations NSW

3. CX & Data

4. Distribution

5. Paper storage

The new purpose-built 33,000m² Dandenong South 3PL facility became operational ahead of schedule and was already at 85% capacity following new client wins. IVE’s national 3PL footprint now stands at 84,000m², up from 60,000m² in the prior period.

In packaging, the Kemps Creek plant is in production, with major new clients PepsiCo and Arnott’s coming online in June 2026.

Management flagged that the benefits of these initiatives are expected to emerge largely in FY27, meaning the capacity and efficiency gains are yet to be fully reflected in results.

Acquisitions and Lasoo advance the ‘Now to 2030’ strategy

IVE completed two acquisitions during the period as part of its ‘Now to 2030’ strategy.

Impressu, a Brisbane-based print business, was acquired for $13.5m (effective 4 November 2025). Alongside the acquisition, IVE signed a 6-year (+2) marketing services agreement with Domino’s Pizza Enterprises for the continued and expanded supply of services.

Daily Press, an Australian-based creative agency specialising in digital, social media and performance marketing, was acquired for total consideration of up to $35m (effective 31 December 2025). This comprised $25m cash on completion, up to $8m in deferred consideration subject to performance hurdles, and up to a further $2m subject to stretch performance targets. The acquisition strengthens IVE’s creative, social and performance marketing capabilities.

The Lasoo retail media platform recorded record growth across all key metrics. Retailers live reached 362, unique users climbed 44% to 5.2m, gross transaction value rose 42% to $25m, and repeat customer GTV grew 76%. Management noted Lasoo is on track to break even during FY28.

For investors, these initiatives diversify revenue into higher-margin creative and content services while building recurring, annuity-style income.

Commercialising AI as a recurring revenue engine

IVE positioned artificial intelligence (AI) as both an internal productivity tool and a client-facing revenue stream. The presentation highlighted a “single source of truth” Snowflake enterprise data foundation, alongside partnerships with Salesforce Agentforce, Adobe and Anthropic Claude embedded across its platforms and client solutions.

Its proprietary Indy platform, which helps brands generate on-brand design assets, now serves 590 clients and 1,500 active users, monetised through ongoing monthly retainers.

The company also detailed an agentic AI Martech project being built with a leading B2C financial institution, where the commercial model is shifting from professional-services hours toward agentic retainers.

Recurring revenue by design

AI platforms and agentic solutions commercialised through ongoing retainers, building sustainable annuity income.

Balance sheet, cash flow and capital management

Net debt stood at $173.2m at year end, with gearing of 1.54x pre-AASB 16 EBITDA, consistent with the company’s internal benchmark of around 1.5x. The increase reflected acquisition funding and elevated growth capital expenditure.

Cash on hand was $44.1m, with undrawn debt capacity of $109m. The senior debt facility was increased by $80m to $330m in December 2025 to provide additional capacity for expansion.

Operating cash conversion remained strong at 93.6% of EBITDA. Capital expenditure was elevated at $43.2m, reflecting the Kemps Creek and packaging fit-outs, and is expected to normalise to around $26m in FY27.

The on-market buyback resulted in the cancellation of a further 2,313,940 shares, or approximately 1.5% of issued capital, at an average cost of $2.66 per share.

For investors, the conservative gearing position leaves headroom to fund the 2030 acquisition pipeline.

FY27 outlook and the road to 2030

IVE guided that FY27 underlying NPAT on a pre-AASB 16 basis is expected to be broadly stable, subject to continued economic uncertainty and any strategic initiatives executed under the 2030 strategy.

Post-AASB 16 NPAT is expected to be down relative to FY26, due to a roughly $6m adverse non-cash lease timing impact mainly associated with the Kemps Creek and Dandenong South leases, which reverses over the life of the leases. IFRS NPAT is expected to increase materially on significantly reduced non-operating items.

Capital expenditure is expected to fall to around $26m, with net debt at 30 June 2027 anticipated to be below 1.5x pre-AASB 16 EBITDA. The Board intends to base dividends on a payout ratio of 55%–65% of underlying pre-AASB 16 earnings.

The company’s 2030 ambitions target revenue of $1.2–1.3B, an EBITDA margin above 15%, and annual EPS growth of 3–5%+.

Management outlined the following areas of focus for FY27:

1. Continue executing the 2030 strategy.

2. Optimise the value of recent acquisitions.

3. Grow organic packaging via the Sydney plant.

4. Fully leverage the Dandenong 3PL relocation and Kemps Creek supersite.

5. Expand the Creative and Content offering, including integrating Daily Press.

6. Grow the Lasoo platform toward FY28 breakeven.

Near-term earnings appear stable-to-soft on paper, but the groundwork laid across capacity, acquisitions and AI is intended to set up growth toward the company’s stated 2030 benchmarks.

Don’t Miss the Next Consumer & Marketing Sector Mover

Get FREE breaking ASX news delivered to your inbox within minutes of release, complete with in-depth analysis already done for you. Join 20,000+ investors staying ahead of the market across Tech, Healthcare, Finance, Consumer and more. Click the “Free Alerts” button at StockWire X and get the next market-moving announcement the moment it hits.