Reliance Worldwide: Still some challenges in the near term

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Alex Lu
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By Alex Lu
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Date posted:
22 August 2023, 7:00 AM
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  • Reliance Worldwide's (ASX:RWC) FY23 result was slightly above our expectations and largely in line with Bloomberg consensus. FY24 outlook guidance however was weaker than anticipated.
  • Key positives: Americas EBITDA margin rose 100bp to 17.9%; Cash conversion was strong at 107% due to inventory reductions; Balance sheet remains healthy with ND/EBITDA at 1.7x well within management’s 1.5-2.5x target range.
  • Key negatives: Management expects global macroeconomic conditions to remain challenging in FY24; EBITDA margins in both APAC (-330bp) and EMEA (-170bp) were down materially.
  • We adjust FY24/25/26F underlying EBITDA by -3%/-3%/-3%.
  • Our target price falls to (login to view) on the back of changes to earnings forecasts, partially offset by favourable FX updates (eg, lower AUD/USD).

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