Southern Cross Electrical Lifts FY26 EBITDA Guidance Despite H1 NPAT Loss

Southern Cross Electrical Engineering (ASX: SXE) has announced a statutory NPAT loss of $12.8 million in H1 FY26, primarily due to $46.1 million in WestConnex arbitration costs, while simultaneously lifting its FY26 underlying EBITDA guidance to at least $72 million.

**Southern Cross **reported H1 FY26 revenue of $349.1 million, a 12.2% decrease from the prior comparable period's $397.4 million.

This was primarily due to the winding down of large projects, including the Collie BESS.

A significant WestConnex arbitration cost of $46.1 million contributed to the loss.

Nevertheless, the company declared an interim dividend of 2.5 cps, maintaining its franking account balance at $67.1 million.

EBITDA Guidance Lifted Despite Costs

Underlying EBITDA for H1 FY26 stood at $35.4 million, representing a 30.8% increase on the prior comparable period.

Management has now raised the FY26 underlying EBITDA guidance to at least $72.0 million.

An increase in guidance is a significant event, signalling management's latest view on expected future performance and influencing expectations for future earnings.

This update suggests a strong underlying profit growth trajectory.

The company maintains a robust balance sheet, reporting $58.8 million in cash and no debt, and has $53.2 million in bonding headroom available from its $150.0 million facilities capacity.

Order Book and Data Centre Pipeline Strong

The order book expanded by 6% year-on-year to $710 million, with 85% of this work concentrated on the East Coast.

Southern Cross Electrical Engineering reported data centre revenue of $120 million in FY25, and an unprecedented tender pipeline exceeding $1 billion is noted for future construction periods.

The Force Fire acquisition, completed in April 2025, has been consolidated for the full period, contributing to expanding multi-disciplinary offerings and recurring revenue streams.

Recurring revenues comprised 27% of H1 FY26 revenue.

Strategic Growth Drivers Identified

The company continues its focus on disciplined mergers and acquisitions to deepen sector presence and broaden geographic and disciplinary reach, actively exploring new targets.

Southern Cross Electrical Engineering has a proven M&A playbook, with past acquisitions including Datatel, Heyday, Trivantage Group, MDE, and Force Fire.

Key growth drivers include the large and accelerating data centre pipeline, significant infrastructure projects such as Western Sydney Airport and the Sydney Metro St Marys Station, and opportunities within the renewables and storage sector, highlighted by the awarded Steel River East BESS project.

Furthermore, the manufacturing capacity at Trivantage is set to expand to 17,000m2 by 30 June FY26, supporting increased prefabrication and cross-group deliveries.

Outlook Positive Despite One-Off Costs

Southern Cross Electrical Engineering's H1 FY26 results present a dichotomy between a statutory NPAT loss driven by WestConnex arbitration costs and a strengthened outlook supported by rising underlying EBITDA guidance.

The company's robust order book, expanding data centre pipeline, and strategic growth initiatives through acquisitions and diversification position it for future earnings growth, underpinned by a solid financial position.