Trifast Delivers Margin Growth Despite Revenue Decline, Confident on Path to 10%+ EBIT Margin

Trifast FY26 results show margin growth is winning the battle, even if revenue is still under pressure

This is one of those results where the sales line looks a bit shabby, but the underlying quality of the business looks better. Trifast grew profits and margins in FY26 despite lower revenue, which tells you management is being picky about the work it wants and getting sharper on costs, pricing and efficiency.

Revenue fell 7.3% at constant exchange rates, or CER, to £207.1 million, and fell 6.7% at actual exchange rates, or AER, to £208.4 million. But gross margin improved to 30.0% from 28.3%, while underlying EBIT, which means earnings before interest and tax before one-off or separately disclosed items, rose to £16.3 million at CER.

Key FY26 numbers	FY26	FY25
Revenue	£208.4 million	£223.5 million
Gross margin	30.0%	28.3%
Underlying EBIT	£16.5 million	£14.9 million
Underlying EBIT margin	7.9%	6.7%
Underlying profit before tax	£12.3 million	£10.4 million
Statutory profit before tax	£0.1 million	£4.9 million
Adjusted net debt	£16.0 million	£17.4 million
Dividend per share	1.90p	1.80p

Why Trifast margins improved despite falling sales

The biggest positive here is that Trifast did not chase weak quality revenue just to keep the top line looking tidy. Management said it focused on the quality of revenue over volume, and the numbers back that up.

Gross margin rose by 170 basis points to 30.0%, helped by pricing discipline, better sales mix and structural efficiency benefits. Underlying EBIT margin improved by 110 basis points to 7.8% at CER, putting the group closer to its medium-term target of more than 10%.

Costs also moved in the right direction. Cost of sales fell by £14.2 million, distribution expenses by £1.1 million and administrative expenses before separately disclosed items by £1.6 million. Payroll costs dropped to £45.8 million from £49.0 million, while average headcount fell to 1,020 from 1,176.

That is the encouraging part of this update. Trifast is proving it can protect and even expand profitability in a tough market. The less encouraging part is obvious – demand is still soft, particularly in automotive, and revenue is still going backwards.

Underlying profit looks solid, but statutory profit was hit hard by Project Ignite and other charges

If you only look at the statutory profit before tax of £0.1 million, these results look dreadful. But that would miss the point.

Underlying profit before tax increased 18.3% to £12.3 million. The collapse in statutory profit was driven by £12.3 million of separately disclosed items, including £6.0 million of Project Ignite costs, £2.4 million of restructuring and transformation costs, a £1.4 million Malaysia manufacturing write-off and £0.9 million of impairment charges.

Project Ignite is the big one. This is Trifast’s Microsoft Dynamics 365 ERP rollout, with ERP meaning enterprise resource planning software – the plumbing that runs data, inventory, finance and processes across a business. The company says these cloud-based implementation costs had to be expensed rather than capitalised because of the accounting rules for Software as a Service arrangements.

That matters because it makes the statutory result look much worse today. It also led to a retrospective correction of previously capitalised SaaS costs. Investors should not ignore that. Even if the accounting treatment is the issue, the cash spend and execution risk on a major transformation project are still real.

So my take is simple: the underlying performance is good, but investors should keep a close eye on whether Project Ignite delivers the efficiency gains management is promising.

Cash generation, lower debt and a higher dividend strengthen the investment case

Another clear positive is cash. Cash generated from operations rose to £20.2 million from £19.1 million, helped by an £8.1 million inflow from inventories and a £1.8 million inflow from receivables.

Adjusted net debt fell to £16.0 million from £17.4 million, while leverage improved to 0.75x from 0.97x. That is a comfortable level, and importantly it gives Trifast room to keep investing in its systems and commercial capability without stretching the balance sheet.

Cash and cash equivalents increased to £32.4 million from £24.3 million. The dividend was lifted to 1.90p per share from 1.80p, including a recommended final dividend of 1.30p. That is not a huge jump, but it is a sign the board believes the cash generation is dependable enough to keep the progressive dividend policy intact.

Regional performance shows North America strength and Asia weakness in Trifast FY26

The regional split tells an important story. North America was the standout growth area, while Asia was the weak spot.

• UK & Ireland – Revenue fell 11.1% to £64.2 million, but underlying EBIT rose 55.2% to £4.5 million and margin improved to 7.0%.
• Europe – Revenue fell 7.5% to £72.9 million, while underlying EBIT rose 17.4% to £8.1 million and margin improved to 11.1%.
• Asia – Revenue fell 9.9% to £46.4 million, with underlying EBIT down 42.0% to £5.1 million and margin dropping to 11.0%.
• North America – Revenue rose 6.0% to £35.1 million, with underlying EBIT up 10.0% to £3.3 million and margin improving to 9.5%.

Asia is the blemish here. Management blamed increased competition, especially linked to Chinese electric vehicle manufacturers, pricing pressure and delayed customer ordering. That is not trivial, because Asia has historically been an important profit contributor.

On the plus side, Europe and UK & Ireland both showed that margin repair is working, and North America looks like a genuine growth engine.

Smart Infrastructure, Medical and India are central to the Trifast growth plan

Trifast is trying to tilt the business towards better quality end markets. Smart Infrastructure now makes up 17% of the portfolio and the target is 30% by FY30.

The group also highlighted Medical and India as attractive growth areas. India is described as scaling rapidly with strong FY27 momentum, while North America growth is being supported by Smart Infrastructure and Medical.

This matters because it suggests the revenue decline is not just about weak markets. It is also about reshaping the mix towards customers and sectors where margins and resilience should be better.

Trifast FY27 outlook supports confidence, but the macro backdrop is still awkward

The board says positive momentum has continued into FY27 and that the commercial pipeline is the strongest since the strategy was implemented. Trifast also came in slightly ahead of pre-results consensus forecasts, which had pointed to revenue of £207 million, underlying EBIT of £16.0 million and underlying profit before tax of £11.7 million.

That said, management is not pretending the backdrop is easy. It flagged continued softness in automotive, US tariffs on steel and aluminium, foreign exchange volatility and the Middle East conflict as ongoing risks.

My view is that this is a credible update. Trifast is not back to full health yet, because revenue is still falling and statutory profits have been crushed by transformation costs. But the business is clearly becoming leaner, more disciplined and more profitable underneath the noise.

If management can turn the stronger pipeline into top-line growth while holding onto these better margins, the 10% plus EBIT margin target looks realistic. For retail investors, that is the key point from this RNS. The recovery is no longer just a story – it is starting to show up in the numbers.