Slater and Gordon (ASX:SGH) reported a “strong first-half result” for the six months ended 31 December 2025, highlighting earnings growth, margin expansion, and improved cash generation across its industrial services and energy exposures. CEO and Managing Director Ryan Stokes said the group’s strategy remains focused on owning and operating market-leading businesses with scale and defendable competitive positions, supported by what the company calls the “SGH way” operating model and disciplined capital allocation.
Half-year financial performance and dividend
For the period, SGH reported EBITDA of AUD 1.1 billion, up 1%, and EBIT of AUD 844 million. Underlying NPAT increased 2% to AUD 518 million, while statutory NPAT rose 1% to AUD 473 million. Revenue of AUD 5.4 billion was broadly flat to slightly down (management cited a 2% contraction), primarily reflecting the “expected normalization” of elevated WesTrac capital sales in the prior comparative period, partially offset by stronger revenue at Boral.
SGH declared an interim fully franked dividend of AUD 0.32 per share, up 7%, which Stokes said aligned with the company’s ambition to deliver “stable and growing dividends over time.”
Cash flow, leverage, and balance sheet
Operating cash flow increased 32% to AUD 1.1 billion, supported by EBITDA cash conversion of 98%. Richards attributed the lift primarily to higher operating cash flows from WesTrac (up AUD 249 million) and Boral (up AUD 20 million), reflecting a focus on working capital optimization. Dividends from equity-accounted investees also increased operating cash by AUD 27 million, largely due to a higher dividend from Beach Energy.
Net investing cash outflows rose to AUD 408 million, driven by AUD 96 million invested in the Crux project and higher capital expenditure at Boral, including catch-up capital on heavy mobile equipment and growth capital on new quarries. Closing net debt decreased 4% (down AUD 163 million) to AUD 4.0 billion, and leverage improved to 1.91x adjusted net debt to EBITDA, which management noted was below its target range and increased balance sheet flexibility.
At 31 December, SGH reported available liquidity of AUD 2.1 billion, including AUD 575 million of uncommitted facilities. The company also highlighted that 70% of drawn debt was fixed with an average rate of 4.9% and four years of remaining tenor, and that refinancing of facilities during the period left “no corporate bank facility maturities until FY30.”
Business unit performance: WesTrac, Boral, and Coates
WesTrac reported revenue of AUD 3.0 billion, down 6% following the normalization of prior-period capital sales. EBIT of AUD 348 million was broadly flat, as higher services revenue and margin expansion offset the movement in capital sales. EBIT margin increased 60 basis points to 11.7%, driven by a higher services mix, cost management, and improved workshop and labor utilization. Operating cash flow rose 92% to AUD 496 million, with EBITDA cash conversion of 129% due to improved inventory and working capital management.
Management said services demand remained strong, with elevated rebuild activity expected to strengthen in the second half. In Q&A, Stokes said production volumes remained the key activity driver for WesTrac and discussed customer focus on cost structures, maintenance deferrals that had begun to ease, and the role of technology in future fleet decisions. He also noted parts pricing in the second half had moved as anticipated and represented a slight headwind that was “not as material” in quantum.
Boral delivered what SGH described as a record first-half performance. Revenue increased 7% to AUD 1.9 billion, supported by volume growth, an improved go-to-market strategy, and “value-led pricing traction.” EBIT rose 10% to AUD 284 million, with EBIT margin expanding to 14.7%. Operating cash flow was AUD 336 million and ROCE increased to 19.1%, up 3.8 percentage points. Operational metrics included deliveries on time rising four percentage points to 87% and grade of service increasing three percentage points to 87%.
Boral reported volume growth across core products, with concrete volumes up 8%, cement up 7%, and quarries up 3%, with stronger activity cited in Queensland and Western Australia and stable activity in New South Wales and Victoria. Average selling prices across core products were up 2%. SGH said Boral would continue focusing on cost variabilization, asset and network optimization, and SG&A efficiencies, and noted the Boral CEO succession process was expected to conclude in March.
Coates delivered a sequential improvement compared with the second half of FY25, though revenue of AUD 520 million and EBIT of AUD 142 million were down 5% and 9%, respectively, year-on-year. Management attributed the contraction to the residual impact of activity decline in the second half of FY25, partially offset by cost actions and operational efficiencies. Time utilization improved to 61%, while the repairs and maintenance to sales ratio improved to 17%. Coates’ win rate increased 6.2 percentage points to 33.8% amid higher quoting activity, with management expecting momentum to build in the second half as deferred major infrastructure projects recover.
Energy, projects, and other portfolio developments
In energy, SGH highlighted that Beach Energy achieved first gas from the Waitsia Stage Two project in December. Beach production for the half was 9.5 million BOEs and NPAT was AUD 219 million, down 7% and 8%, respectively, predominantly due to Cooper Basin floods. Management said Beach generated positive free cash flow and ended the period with AUD 925 million in available liquidity.
At Crux, management said construction of the Shell-operated LNG backfill project continued to advance, with substructure installation almost complete and first gas still targeted for FY28. SGH’s share of Crux investment was AUD 96 million in the half. In Q&A, management indicated there was still “substantive” capital to be deployed and referenced “another AUD 150 million to go,” while noting an outstanding issue around walk-to-work vessels was being resolved.
SGH also provided updates on property and media. A competitive tender process for the 500-hectare Ravenhall Logistics Precinct was described as nearing completion, with SGH planning to select a development partner and move quickly to formalize arrangements and progress planning. In media, the merger of Seven West Media and Southern Cross Media Group was completed on 7 January 2026, with expected annual pre-tax cost synergies of AUD 25 million to AUD 30 million within 18 to 24 months. SGH holds a 20.1% interest in the merged entity Southern Cross Media Group.
Guidance, M&A commentary, and outlook
SGH reiterated FY26 guidance for low to mid-single digit EBIT growth. Management said priorities for the remainder of FY26 include strengthening sales execution, targeting improved operational leverage and efficiency, and driving the adoption of AI and innovation initiatives.
On M&A and balance sheet capacity, management emphasized flexibility given cash generation, with Richards and Stokes indicating comfort taking leverage above the 2.5x target level for the right transaction, with a clear plan to return to target levels. When asked about the previously disclosed BlueScope approach, Stokes said SGH believed its AUD 29 dividend-adjusted offer was “full and fair,” but added that if shareholders did not see value in the proposal, “we’ll move on,” pointing to other opportunities aligned with SGH’s investment criteria.
About Slater and Gordon (ASX:SGH)
Slater and Gordon Limited, a law firm, provides legal practices in Australia. The company provides legal services in various areas, such as workers compensation, motor vehicle and car accidents, public liability, medical law, asbestos, silicosis, military compensation, police compensation, comcare, institutional abuse; superannuation and disability insurance; class actions; dispute resolution; employment law; and will dispute, as well as provides union services. It also offers litigation and emerging services.
