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In a remarkable market development, Reece Ltd (ASX: REH) commands attention as its share price experiences a notable uptick. As of Tuesday, the company's shares skyrocketed by an impressive 18.31%, to close at AU$28.50. Noteworthy here is that, during today’s trading session, the company reached its 52-week high of AU$28.95. This surge is directly linked to the release of the company's half-year results, showcasing a robust financial performance.
Key financial metrics
- Sales revenue witnessed a solid 2.5% uptick, reaching an impressive AU$4,537 million.
- The adjusted Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) surged by 8%, reaching AU$526 million, demonstrating the company's effective cost management.
- Adjusted Net Profit After Tax saw a commendable 6% increase, totaling AU$224 million, reflecting Reece's robust financial health.
- Earnings Per Share (EPS) experienced a notable 6% growth, reaching 34.6 cents.
- Despite the impressive financial performance, Reece maintains a steady interim dividend, with a fully franked rate remaining flat at 8 cents per share.
Unveiling the First-Half Performance
For the six months ending on December 31, Reece reported a substantial 2.5% increase in sales revenue, propelled by a 2% growth in ANZ sales, totaling AU$1,972 million. Additionally, US sales amounted to US$1,683 million, holding steady in constant currency but surging by 3% in Australian dollars due to favorable currency movements.
The strong financial performance is attributed to disciplined operational cost management and a relentless focus on executing the fundamentals of the Reece business model.
Statutory net profit after tax witnessed a remarkable 20% increase, reaching AU$224 million, while adjusted net profit after tax grew by 6%.
Given the market's anticipation of a significant decline in earnings per share for FY 2024, Reece's first-half results surpassed expectations, showcasing the company's financial resilience and strength.
Insightful Management Commentary
Reece's CEO, Peter Wilson, expressed satisfaction with the H1 2024 results, emphasizing the company's resilient business model and the team's commitment to executing fundamentals.
Wilson stated, "We delivered a very solid HY24 result, underpinned by our resilient business model and strong ongoing execution by our team. The team has focused on strong execution of the fundamentals to continue delivering our customer promise, which is the driver of our success as a business."
Navigating the Second Half
As Reece looks ahead to the second half, the company anticipates subdued demand across its business, particularly in the ANZ region, with an expected softening in the business environment. Despite short-term challenges, Reece remains committed to its long-term vision of building a stronger business and delivering on its 2030 goal of being the trade's most valuable partner.
Strategic Outlook and Industry Fundamentals
Management acknowledges the potential challenges in the second half but emphasizes the medium to long-term support provided by industry fundamentals. The company's unchanged approach revolves around a relentless focus on its customer proposition and excelling at the fundamentals.
