Coventry Group Q426 Earnings Nearly Double as Turnaround Gains Traction

Coventry Group (ASX: CYG) lifted unaudited sales to $98.5 million in Q4 FY26, reflecting stronger activity across Australia and New Zealand.

Normalised EBITDA reached $4.1m compared with $2.1m in the preceding quarter, marking a second consecutive quarter of EBITDA improvement after a near-breakeven second quarter and leaving the group with a stronger earnings run rate entering the 2027 financial year.

Full-year sales reached $375.3m, representing growth of 2.8%, although full-year EBITDA of $9.4m remained 23.7% below the previous financial year.

Second-half EBITDA of $6.2m almost doubled the $3.2m first-half result despite broadly flat sales, demonstrating greater operating leverage as improvement initiatives gained traction.

Coventry attributed the improvement to sales growth, gross margin initiatives, operating cost reductions, and the progressive effect of its back-to-basics operating program.

Strengthened Cash Flow

Operating cash flow improved to positive $5.9m in Q4 FY26, the strongest quarterly result of the financial year.

This reflects the improved earnings, along with disciplined working capital management and benefits from the company’s inventory work.

Coventry conducted a comprehensive inventory verification and optimisation program during the period, including a detailed stocktake covering approximately 88% of the value of its inventory holdings that resulted in a write-off of $2.3m.

Coventry achieved its target of $10m in annualised cost savings, up from $5.1m at the half year, with the full run-rate benefit expected to emerge progressively in monthly operating expenses.

Management has identified further efficiency opportunities and expects the savings already delivered to help absorb inflationary pressure from wages, rents and other operating costs.

Funding Position Supported

Coventry received lender waivers for June-quarter covenant testing and expects its position to improve as weaker earlier trading periods progressively leave the trailing 12-month EBITDA calculation.

The group held $14.9m of liquidity at 30 June 2026 and is in discussions to extend its financing facility beyond its scheduled July 2027 expiry.

A balance sheet review produced non-cash adjustments including a further $2.1m inventory provision, a $1.1m job management system write-off, and a $0.55m employee leave provision adjustment.

Coventry expects continued sales momentum, expanding gross margin initiatives, the remaining cost-saving benefits, and the ongoing Steelmasters integration to support improved financial performance in FY27, while its strategic review remains ongoing.