Codan (ASX:CDA) reported a strong first-half FY2026 result, with management pointing to broad-based growth across its communications and metal detection segments, operating leverage, and continued investment in engineering and capability.
Leadership transition and business overview
Managing Director and CEO Alf Ianniello opened the company’s results presentation by announcing that CFO and Company Secretary Michael Barton plans to retire at the end of August, following Codan’s FY2026 full-year results. Barton will remain with the business for a structured 12-month transition period from August.
Ianniello reiterated Codan’s focus as a global technology group operating in “critical communications and detection,” with a strategy built on organic growth, targeted acquisitions, and sustained engineering investment. He described diversification as a key strength, with Minelab delivering cyclical upside and communications positioned for structural growth driven by defense and public safety demand.
Group financial results: revenue up 29% and higher dividends
For the first half, Codan reported group revenue increased 29% to AUD 394 million, reflecting “strong organic growth” and a full first-half contribution from CAGWorks. EBIT increased 52% and NPAT increased 55% to AUD 71 million, which management attributed to operating leverage and an improved product mix, “particularly within Minelab.”
The board declared a fully franked interim dividend of 19.5 cents per share, up 56% on the prior corresponding period.
Barton said operating expenses rose due to investment in shared services, higher performance-linked expenses, product launch costs, and the full-period integration of CAGWorks. The company’s tax expense increased to 25%, which Barton linked to a greater share of metal detection profits being taxed in Australia. He said NPAT margin improved to “over 18%.”
Codan ended the half with net debt of AUD 88 million, up AUD 10 million from June, which Barton said largely reflected working capital investment to support growth and higher activity. Leverage was 0.4x EBITDA. The company also cited an undrawn AUD 140 million debt facility plus AUD 150 million in accordion capacity, describing this as “significant financial flexibility” for acquisitions.
Engineering investment during the half was AUD 36 million, or about 9% of group revenue, supporting development pipelines in both communications and metal detection.
Communications: order book rises, defense and unmanned demand remains key
In communications, revenue increased 19% to AUD 222 million, while segment profit rose 17% to AUD 58 million. Margins were “broadly stable” at 26% as Codan integrates CAGWorks and manages a “challenging trading period” in Zetron Americas. The communications order book increased 19% to AUD 294 million at December 31, which management said supports revenue visibility into the second half and beyond.
Ianniello said the company remains focused on lifting communications margins toward its 30% target by FY2027, with expected benefits from integration and scale efficiencies. In the Q&A, he said Codan improved organically in the half and that further revenue growth in the second half within the company’s 15%–20% communications growth target range should also support margin improvement.
Within the segment, DTC delivered growth supported by defense demand and increased adoption of unmanned system solutions. Codan said unmanned systems revenue increased 68% to AUD 73 million, with about half linked to operational defense applications in conflict zones and the remainder tied to non-conflict defense and security programs in Asia, the U.S., and Europe. Management emphasized that growth rates across conflict and non-conflict markets were “broadly consistent.”
The company highlighted the “Blue SDR” (also referenced during Q&A as SDR 90) as a material contributor in the half, describing it as an ultra-lightweight software-defined radio platform designed for long-range, secure connectivity in unmanned and mobile applications, particularly drone deployments.
Zetron Americas was impacted by slower procurement cycles among state and local agencies, extending sales cycles and deferring order timing. However, management said early second-half indicators were improving as funding approvals progressed. In response to questions about competitive dynamics and the U.S. pipeline, Ianniello pointed to differences in product offerings and funding dynamics for Zetron’s customer tiers, while also noting increased activity levels in January and February and stronger pipeline activity.
Metal detection: Minelab posts exceptional first half, Africa leads growth
Minelab’s first-half performance was described as “exceptional,” with revenue up 46% to AUD 168 million. Segment margin expanded to 45%, which management attributed to a higher mix of gold detector sales and operating leverage.
Africa was the standout region, with elevated gold prices supporting demand, particularly in West Africa. Management also called out “high teens growth” in the rest of the world, supported by product innovation, retail expansion, and development of direct-to-consumer platforms.
Codan launched the Gold Monster 2000 during the half, which it said delivers improved sensitivity to ultra-fine gold and better performance in mineralized ground. Management said early feedback has been positive and that distribution and production are still ramping following the launch timing in Q2.
In Q&A, Ianniello said the 45% segment margin was “exceptional” but indicated the company believes it is maintainable. He also said Codan expects to reinvest in the business to sustain growth. Looking to the second half, Codan said Minelab revenue to date is tracking in line with the strong first half, and based on current conditions it expects second-half performance to be “at least in line” with the first half, supported by gold market conditions and the benefit of recent product releases. Management also discussed an upcoming high-end gold detector update in the GPZ/GPX range, described as the first such update in “almost a decade.”
Outlook and capital allocation
Management said market conditions remain positive in both communications and metal detection. Codan reiterated its intention to continue investing in engineering programs to maintain technology leadership, while retaining capacity for disciplined, accretive acquisitions aligned with product and technology roadmaps.
For FY2026, Codan said communications is on track to deliver revenue growth within its 15%–20% target range, supported by underlying defense demand and the full-year contribution from CAGWorks.
About Codan (ASX:CDA)
Codan Limited develops technology solutions for United Nations organizations, mining companies, security and military groups, government departments, individuals, and small-scale miners. It operates through Communications and Metal Detection segments. The Communications segment designs, develops, manufactures, and markets communication equipment that consists of DTC radio solutions for the wireless transmission of video and other data applications; and Zetron communications solutions. The Metal Detection segment designs, develops, manufactures, and markets metal detection equipment, such as handheld metal detecting technologies for recreational, gold mining, demining, and military markets.
