Flowtech H1 2025: Margins up, pipeline bulks up, but profits still subdued
Flowtech Fluidpower has posted a steady first half in a tough industrial market. The topline nudged ahead, gross margins improved, costs were kept tight, and the order book swelled. That combination sets the business up for a better H2, according to the Board, with trading described as in line with full year expectations.
Key numbers investors should know
| Metric | H1 2025 | H1 2024 | FY 2024 |
|---|---|---|---|
| Revenue | £56.9m | £55.7m | £107.3m |
| Gross profit | £22.3m | £21.4m | £41.0m |
| Gross margin | 39.2% | 38.4% | 38.2% |
| Underlying EBITDA | £3.5m | £4.7m | £5.9m |
| Underlying operating profit | £1.6m | £2.9m | £2.7m |
| Operating profit/(loss) | £0.8m | £1.2m | £(25.2)m |
| Profit/(loss) before tax | c. breakeven | £0.3m | £(27.1)m |
| Basic EPS | (0.23p) | 0.41p | (42.23p) |
| Pre IFRS 16 net debt | £18.5m | £13.5m | £15.1m |
Notes: Underlying EBITDA is earnings before interest, tax, depreciation and amortisation, excluding “separately disclosed” items. Like-for-like means excluding contributions from acquired businesses.
Revenue trends: like-for-like still soft, but momentum is improving
Group revenue rose 2.1% year on year to £56.9m, helped by acquisitions. On a like-for-like basis, sales fell 11.8% versus H1 2024, reflecting weak industrial demand, particularly in March and April. The more encouraging read is sequential: like-for-like revenue was up 5% on H2 2024, and June was the best month for over a year on revenue, margin and EBITDA.
Regionally, compared with H2 2024, all three areas grew – Great Britain +11.0%, Island of Ireland +5.9%, and Benelux +14.8% – signalling that the self-help plan is gaining traction despite market headwinds.
Order book and pipeline: the standout positive
The sales order book is more than 25% higher at the half year than at the start of 2025, with “a number of new, higher value contracts” secured. That enhanced visibility matters: it underpins the Board’s guidance that H2 2025 should deliver higher profitability and strong cash generation.
Margins and costs: execution is paying off
Gross margin improved by 100bps to 39.2% versus FY 2024, driven by commercial discipline and product mix. Excluding acquisitions, gross margin was 125bps higher than H1 2024 and 97bps higher than H2 2024. That is meaningful in a distributor – a single point of margin often drops straight through when costs are controlled.
Underlying operating overheads were £20.8m, up £2.3m year on year due to acquisitions. On a like-for-like basis they were £18.1m, a £0.5m reduction despite wage and NI pressure. The combination of better margins and controlled costs helped to offset lower like-for-like sales, limiting the decline in underlying EBITDA to £3.5m (down £1.2m year on year but £2.3m better than H2 2024).
Divisional performance: GB leads, Benelux back in the black
- Great Britain – revenue £41.7m; underlying segment profit £3.1m with a 7.4% return on revenue.
- Island of Ireland – revenue £10.2m; underlying profit £1.2m with an 11.7% return on revenue.
- Benelux – revenue £5.0m; underlying profit £0.3m and a 6.6% return on revenue, a notable turnaround from H2 2024’s loss.
Digital, contracts and M&A: the growth levers
New website and e-commerce rollout
A major plank of the Strategy for Growth is the new digital platform, launched in the UK in July with most customers onboarded by August. Rollout to Ireland and Benelux is planned in H2 2025. Management expects improved momentum from this channel into Q4 2025 and beyond. This should aid service levels, customer reach and efficiency.
Project wins and supplier agreements
Targeting sectors with government-backed investment has boosted the pipeline. Two bridge projects have been secured with a combined value of €9m over the next 24 months. New strategic supplier agreements were also signed in H1, which should support H2 growth and broaden the range.
Acquisitions making a positive contribution
Thorite, Allswage and Thomas Group are now contributing, with further gains expected in H2. Combined, these businesses currently deliver approximately £18m of annualised revenue and were acquired out of distressed situations for minimal consideration.
Cash, debt and working capital: set for H2 cash generation
Pre IFRS 16 net debt was £18.5m at 30 June 2025 (H1 2024: £13.5m), leaving £6.5m of headroom in the £25m banking facilities. The year-on-year increase reflects selective growth investment (£3.9m), acquisition-related costs (£1.7m), and the FY 2024 dividend (£1.4m). Working capital for non-acquired businesses improved by £5.6m year on year.
Operating cash flow was £0.9m (H1 2024: £2.8m) and cash at period end was £0.4m. Management expects stronger cash generation in H2 as profitability improves and investment in platforms normalises into a maintenance phase. The Board previously decided not to pay a dividend in 2025.
Guidance and market context
Despite “continuing challenging and volatile industrial markets”, Flowtech says trading is in line with the Board’s expectations and reiterates confidence that H2 2025 will bring higher profitability and strong cash generation. Prior to this RNS, market consensus for FY 2025 stood at £120.2m of revenue and £8.4m of adjusted EBITDA.
What this means for shareholders
- Positive – margin expansion and order book growth: The 100bps margin gain to 39.2% alongside a 25%+ larger order book is the crux of the bull case for H2.
- Mixed – earnings still modest: Underlying EBITDA of £3.5m shows progress from H2 2024, but year-on-year earnings are lower and EPS is negative at (0.23p).
- Watch debt and cash conversion: Net debt rose to £18.5m with £6.5m headroom. The strategy relies on H2 delivery to generate cash and bring leverage down.
- Execution upside: The e-commerce upgrade, supplier deals and project pipeline – including €9m of bridge projects – give multiple levers for organic growth.
A quick jargon buster
- Like-for-like – excludes contributions from acquisitions to show underlying performance.
- EBITDA – earnings before interest, tax, depreciation and amortisation. A proxy for operating cash profit.
- Basis points (bps) – 100bps equals 1 percentage point.
Josh’s view: cautious optimism, with H2 delivery the catalyst
This reads like a turnaround edging into phase two. The business has tightened margins, controlled costs and rebuilt momentum through Q2. The upgraded website and stronger project pipeline are the right moves, and the acquired businesses are contributing. The near-breakeven pre-tax result – shown as £0.1m in the summary and a small loss of £79k in the detailed statement – reminds us the job is not done.
If Flowtech converts the 25%+ bigger order book into revenue at a 39%+ gross margin while holding costs, H2 should show the operating leverage management is guiding to. Deliver that, and the debate can move from defence to growth. For now, keep an eye on cash generation, debt headroom and the pace of e-commerce adoption through Q4.
