IPD Lowers FY2025 Earnings Guidance
Share Advisor Investing Team | June 2, 2025
ASX:IPG
"IPD Group (ASX:IPG) has released updated FY2025 earnings guidance, flagging a near-term dip in profitability despite continued growth in revenue and its order backlog.
Operating earnings before depreciation and amortisation (EBITDA) are forecast to reach $45.7 million to $46.3 million, down 7.6% at the midpoint compared to the FY2024 pro forma figure.
Operating earnings (EBIT) are expected to land between $38.6 million and $39.2 million, down 9% at the midpoint from the FY2024 pro forma figure.
The main driver behind the lower earnings guidance is a combination of softer margins and ongoing short-term challenges in key end-markets. While core IPD, CMI’s Minto Plugs, and EX Engineering divisions are all forecast to grow revenue by 4.9%, 5.2% and 4.6% respectively, two businesses – CMI’s Cables and Addelec – are expected to experience year-over-year revenue declines of 7.6% and 12.6%. This reflects industry-wide softness in commercial construction as well as some project delays.
What We Took From The Announcement
It’s never ideal to see earnings downgrades from companies you’re invested in, so this update was disappointing for shareholders.
Still, we think there are reasons to stay positive. IPD’s core business remains resilient, full-year revenue is expected to keep growing, and its order backlog stands strong at an elevated $91.5 million. The lower earnings outlook mainly reflects margin pressure as the company transitions to larger, more complex orders and navigates ongoing weakness in the commercial construction sector, which accounts for about one-third of IPD’s total revenue.
Additionally, IPD’s fastest-growing segment – data centre revenue – increased 25% over the past year, highlighting healthy demand linked to electrification and digital infrastructure trends. Operating expenses as a share of revenue have also improved following recent investments, and cash flow generation remains strong – so much so that the Board approved a further $10 million in debt repayment, leaving the business in a net cash position.
The Share Advisor Team’s View
While this update signals a setback in the near term, we remain positive on IPD’s long-term outlook, and our thesis remains unchanged. IPD is well-managed and positioned to continue delivering steady growth as infrastructure and energy requirements in Australia evolve. At roughly 12 times trailing earnings, its valuation already reflects much of the short-term headwinds, offering compelling upside as order momentum builds and margin pressures eventually ease.
IPD Group remains a Buy on our scorecard."