Coventry Group (ASX:CYG) Focuses on Margin Recovery Amid Mixed Q3 FY25 Results

April 28, 2025 04:22 PM AEST | By Team Kalkine Media

Coventry Group (ASX:CYG) Focuses on Margin Recovery Amid Mixed Q3 FY25 Results — Image source: Shutterstock

Segment Highlights

Performance across Coventry Group’s divisions varied notably. A significant contributor to the EBITDA decline was lower sales within the Konnect New Zealand and Fluid Systems segments. Konnect New Zealand managed to hold its market share, despite operating in a softened market environment. Meanwhile, Fluid Systems faced performance challenges that prompted a strategic leadership change. Mr. Brody Sewell, now Head of Fluid Systems, will report directly to the Board, a move aimed at increasing transparency and tackling the division's issues head-on.

Weather conditions also played a disruptive role, particularly in Queensland, where adverse weather led to branch closures and limited staff access to customer sites. Despite these headwinds, Konnect Australia delivered a bright spot for the Group, with its Q3 FY25 EBITDA increasing by 45%. Notably, Gross Margin for this segment improved by over 410 basis points, showcasing operational resilience even amid tough external conditions and the added costs associated with greenfield branch expansions.

Looking Ahead

Coventry Group is intensifying its focus on a range of cost-reduction initiatives to support margin recovery heading into FY26. Strategies include optimizing non-stock procurement, extracting savings from third-party service providers, realizing post-ERP efficiencies, and leveraging synergies from recent acquisitions. These measures are expected to strengthen operational performance and drive better profitability in the coming financial year.

The Group remains committed to maintaining transparency with the market and will continue its practice of providing quarterly trading updates.

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