S&P/ASX 200 Index (ASX: XJO) stock Reece Ltd (ASX: REH) is getting hammered today.
Shares in the plumbing parts company closed on Friday trading for $21.95. In morning trade on Monday, shares just plunged to $19.32, down 12.0%.
For some context, the ASX 200 is down 0.5% at this same time.
Today's sell-down in the $13 billion company follows the release of its half-year results for the six months to 31 December (H1 FY 2025).
Here's what's going on.
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ASX 200 stock tumbles on profit decline
- Half-year sales revenue of $4.40 billion, down 3% from H1 FY 2024
- Earnings before interest and tax (EBIT) of $305 million, down 17% year on year
- Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $475 million, down 10%
- Net profit after tax (NPAT) of $181 million, down 19% year on year
- Interim fully franked dividend of 6.5 cents per share, down 18.7% from last year's interim dividend
What else happened with Reece shares over the half year?
Management noted that the half-year results pressuring the ASX 200 stock today reflect challenging trading conditions in both its ANZ and US markets over the half-year period.
This saw net operating cash inflows fall more than 32% year on year to $256 million. Reece's capex to sales ratio increased to 2.9% during the period.
Reece reported a 3.6% increase in costs (including depreciation and amortisation) amid ongoing investment in its business. This included two "bolt-on acquisitions" in ANZ and 32 net new branches across the company.
Management said that the higher capital expenditure over the half year supported Reece's organic network expansion, its US rebrand activities, as well as branch refurbishments and fleet renewals.
As at 31 December, the ASX 200 stock had net debt of $646 million, up from $518 million a year earlier. The company said this was driven by lower operating net cash flow and increased investment in its growth.
What did management say?
Commenting on the results pressuring the ASX 200 stock today, Reece CEO Peter Wilson said, "Our performance for the first half reflects the challenging trading environment in both regions as mortgage rates and affordability continue to create near term headwinds in our sector."
Wilson added:
Despite the softer first half we continued to invest in the business, expanding our branch network, lifting store standards and enhancing our core capabilities.
While we know the short term will have its challenges, the current environment is one Reece has seen before. Like we always do, we'll look beyond the cycle to protect and grow the business.
Addressing the recent leadership shakeup, Wilson said:
Over the last half we've taken the opportunity to reset our leadership team and refresh our board. These changes will enable us to leverage deep industry and market knowledge across the group and drive long term value.
How has the ASX 200 stock been tracking?
With today's big intraday fall factored in, the Reece share price is down 20% over 12 months, not including dividends.
Longer-term, shares in the ASX 200 stock remain up 70% over five years.
