Wagners (ASX:WGN) executives told investors the company delivered good operating cash flows in the first half of FY2026, with higher capital expenditure largely directed toward growth projects across its construction materials and composites operations.
CapEx focused on growth projects
Management said increased capital expenditure in the period was mainly tied to growth initiatives. More than half of spending went toward expanding the company’s concrete plant network, while additional funds supported increased manufacturing capacity for its CFT business and capacity improvements in cement and quarries.
- New concrete plants as part of the network expansion
- Upgrades to storage facilities at Pinkenba aimed at improving operational efficiencies in cement production
- Additional plant capacity in the CFT business, including new pultrusion machines
- New bulk haulage assets tied to recently extended bulk haulage contracts, expected to help margins via lower repair and maintenance costs and improved equipment efficiency
Funding and shareholder returns
The company completed a placement in September, raising AUD 30 million from existing and new institutional investors. Management said the funds will be deployed toward expanding the concrete plant network and supporting growth in the CFT business.
Wagners also noted that the full-year dividend, which had been declared with the release of the full-year results, was paid during the half.
Market conditions and segment commentary
On outlook, management said conditions remain “fairly positive” and that little has changed in its expectations for the business. Wagners pointed to a “reasonably high level of activity” in South East Queensland and said it expects infrastructure requirements tied to the Olympic Games to add further demand for its products and services.
Management said concrete volumes are expected to rise as the plant network expands, and that should also lift cement volumes. However, executives cautioned that cement margins are expected to be slightly lower in the second half due to increases in raw material and shipping costs that took effect on January 1. The company said it will incorporate those costs into selling prices as customer contracts allow, with management indicating on the call that about 25% of customers saw price changes from January 1, with the remainder moving on July 1.
In the construction materials segment, executives said improved volumes helped margin performance, with operating leverage increasing as fixed costs are spread over higher throughput. In response to an analyst question, management said the concrete business delivered a small EBIT contribution “for the first time in a long time,” helped by solid demand and pricing, while cement benefited from good utilization and volumes. The company also cited improved quarry results, including increased volumes at the Wellcamp quarry reflecting benefits from prior investment.
Wagners said quarry volumes should improve from its Emerald and Castlereagh quarries in Cloncurry as flood recovery works commence. The company also said it continues to pursue new concrete and quarry project opportunities domestically and internationally, and that it remains well positioned to respond as opportunities arise.
Composites and CFT: capacity build and demand dynamics
In composites, management said Australian and New Zealand utility networks continue to provide opportunities for power poles and crossarms, with a number of utility networks trialing the company’s poles. Wagners said it hopes those trials lead to longer-term supply arrangements, noting many of the trialing networks already purchase its crossarms.
However, management flagged a near-term moderation in orders from some customers in the second half, after those customers increased crossarm and pole inventory holdings in the first half. In the Q&A, executives said the company produced about 8,000 poles in the first half, up from around 4,000 in the prior year, but expects some second-half drop-off due to customers holding high inventory levels.
Wagners also provided an update on its manufacturing expansion. The company began building three new pultrusion machines in the first half, which management said will significantly increase pole manufacturing capacity in Australia and the U.S., enabling it to meet increasing demand beyond FY2026. Two machines will be based in Toowoomba and one in Texas, with the first Toowoomba machine expected to be commissioned in September, followed by commissioning in Texas in late September, and then commissioning of the third machine in Toowoomba. Management said the machines are being built concurrently in its Toowoomba workshop.
On the CFT business in the U.S., management said performance below expectations was primarily a volume issue. Executives said the U.S. business has generated revenue from custom-build pedestrian infrastructure and bridges, and noted it sold its first 60 power poles there “last month.” Management said it cannot meaningfully expand pole sales in the U.S. until it is manufacturing in-country, citing tariffs affecting exports from Toowoomba to Texas. While not satisfied with current performance versus Australia, management said the U.S. market is expected to be larger than Australia over the medium term, which is a key reason the company is investing there.
Guidance raised; balance sheet expected to move into net debt
Management said it was “really pleased” with first-half FY2026 performance, citing continued volume increases and improved margins driven by operating discipline and positive market conditions. Based on the first-half performance and continued demand forecasts, Wagners revised its FY2026 guidance, now forecasting full-year operating EBIT in the range of AUD 62 million to AUD 66 million.
In discussing the guidance increase, management emphasized volume—particularly cubic meters of concrete—as the main driver, alongside strong performance in composites, especially higher-margin custom-build work where the company said it is being more selective about contracts. Executives also said the bulk haulage business needs to perform in line with contracted expectations.
On the balance sheet, management said it expects to use debt over the next six months to fund part of the increased capital program and anticipates ending the year in a net debt position, though timing of equipment deliveries and land purchases could influence the exact level. The company said it is on track to spend at least AUD 30 million over the next five months.
On precast, management said it expects infrastructure spend in South East Queensland to provide opportunities and described demand related to Olympic Games projects over the coming years as substantial, though it characterized visibility as “a bit hazy.” The company said it has about $6 million to $7 million of precast work contracted that is not related to the Olympics and expects to begin driving revenue into the precast business starting next month. Management said it believes meaningful Olympic-related revenue is still about 12 months away, adding that the company is currently busy even without Olympic spending.
About Wagners (ASX:WGN)
Wagners Holding Company Limited engages in the production and sale of construction materials in Australia, the United States, New Zealand, the United Kingdom, and PNG & Malaysia. It operates through three segments: Construction Materials & Services, Composite Fibre Technology (CFT), and Earth Friendly Concrete (EFC) segments. The Construction Materials & Services segment primarily provides cement, flyash, ready-mix concrete, precast concrete products, aggregates, and reinforcing steel, as well as mobile concrete, crushing, and haulage services through medium to long-term contracts.
