Volution Group H1 Earnings Call Highlights

12 Mar 2026, 12:02 by Danessa Lincoln · The Markets Daily

Volution Group (LON:FAN) management highlighted a “strong first half performance” as the company reported revenue growth of just over 20% on a constant currency basis, supported by acquisitions and positive organic momentum across all three regions.

Chief Executive Ronnie George and Chief Financial Officer Andy O’Brien told investors that organic revenue growth was 4.2% on a constant currency basis and was “very, very much a volume-driven” outcome, with blended price contributing about 0.6% in the period. The group delivered an adjusted operating profit margin of 22.6%, representing an organic margin improvement of 40 basis points versus the prior year, while cash conversion was 98% at the half-year point.

First-half financial performance and cash flow

O’Brien said the results continued a multi-year pattern of consistent delivery across key metrics, while noting the period included the effect of prior acquisitions. He also provided several modeling data points, including higher finance costs due to acquisition-related borrowings.

Finance costs: increased to £5.1 million from £3.6 million in the prior-year first half, driven by borrowings for the Fantech acquisition. O’Brien added that the actual interest rate on the group’s debt was slightly down versus the prior period.
Tax rate: the effective tax rate rose to 22.5% (from 21.8% in full-year 2025), reflecting higher tax rates in Australia and New Zealand (around 30%) relative to the group’s historical average in the low 20s.
Interim dividend: declared at 4 pence per share, up nearly 18%, according to management.

On cash flow, O’Brien said the company targets at least 90% cash conversion on a full-year basis and typically generates stronger conversion in the second half. Against that backdrop, he characterized 98% conversion at the half year as “a really, really pleasing outcome.”

Working capital was a £4 million outflow, which management said was broadly in line with activity growth and reflected a working capital position that is now “very much at the right level” after earlier inventory actions taken during more challenging supply-chain periods. Capital expenditure was £4.3 million in the half, consistent with the group’s typical £8–£10 million full-year range. O’Brien also highlighted spending on new product development (just under £1 million), continued investment at the Reading facility, and capacity expansion in Erion, North Macedonia, expected to take place over the next couple of years.

The company also recorded a £30.1 million acquisition cash outflow, which O’Brien described as deferred consideration related to the Fantech acquisition.

Leverage, return on capital, and sustainability metrics

Net leverage was 1.3x at the period end, before the completion of AC Industries. O’Brien noted that, on a pro forma basis including the AC Industries transaction, leverage would have been 1.8x—consistent with what the company had signposted when it announced the deal.

O’Brien said the balance sheet remains “in a very comfortable position” for future M&A optionality, citing the group’s consistent cash generation. Return on invested capital (measured using last 12 months’ earnings against a three-point balance sheet average) was 24.6%, slightly lower than 25% previously, marking the first period reflecting the full effect of Fantech.

Management also reviewed sustainability-related indicators, including “low carbon revenue,” which increased to 72.1% of total revenue. O’Brien attributed the increase to growth in heat recovery products, and in the UK, to “continuous running solutions” supported by regulations. Recycled plastics usage was “north of 80%,” though the percentage eased slightly despite an increase in tonnage, which management attributed to availability challenges.

Health and safety performance worsened slightly, which O’Brien called a disappointment and an area of continued focus. He noted the appointment of a new UK operations director with a strong health and safety background.

Regional performance: UK, Europe, and Australasia

George emphasized the value of Volution’s geographic diversity, particularly as markets remain uneven. He described the UK as a market with medium-term opportunity but near-term challenges tied to uncertainty in new build housing activity.

In the UK, management reported 3.8% organic growth, adjusted operating profit up 6.2%, and an operating profit margin of 26.3%. George said residential ventilation grew 4.2%, supported by regulatory changes and share gains, while acknowledging the backdrop of slower housing recovery than hoped. He cited Awaab’s Law—described as more of an awareness issue than a regulation—as supporting ongoing demand in UK social housing refurbishment, though he flagged the tension between demand and affordability for housing associations.

UK commercial revenue declined 7.3%, which George described as a “tough market” and an area where the company is “not particularly happy” with performance. He said the group has expanded its UK commercial footprint with an additional facility in Dudley, doubling the relevant footprint, and remains ambitious but expects it will take time to gain share.

In Europe, George highlighted a recovery in the Nordics, which he said was more pronounced in the second quarter than the first and has continued into the start of the second half. In Central Europe, he cited strong performance from ClimaRad in decentralized heat recovery ventilation and a growing order book. Continental Europe delivered significant margin expansion, with operating margins at 25.3% and operating profit growth of 16% in the first half, according to management.

In Australasia, organic growth was 3.3%. Management described New Zealand conditions as difficult but improving, while Australia residential performed well and commercial was “a little bit more difficult.” George said the group is working to apply lessons from the mature UK platform to improve the Australasian model over time.

AC Industries acquisition and outlook

Volution completed the acquisition of AC Industries in Australia at the beginning of February, after announcing the deal in December. George described the business as an adjacency—ventilation systems in the mining sector—and said February represented the first month of revenue, which “performed really well.” He pointed to an EBITDA margin of 35% and said the group is working through a “200-day plan” integration, with an emphasis on international growth opportunities beyond Australia, where AC Industries has a significant market share.

O’Brien said that when the company announced the acquisition it indicated AC Industries would contribute around 1 pence of additional EPS in FY26, reflecting both the strong margin profile and the debt used to fund the transaction. He added that the business had “consistently growing low double digits” in preceding years, as described at the time of acquisition.

On the outlook, George said the board is mindful of heightened geopolitical risks and the potential for changing conditions, but emphasized Volution’s experience managing disruptions and its position on supply chain and hedging. He said the board now expects adjusted earnings per share for the year to be “at the top end of the range of market expectations.”

In Q&A, management said the company is hedged on UK gas prices through the end of 2027 and electricity through the end of the current year, and noted it is not an energy-intensive business. O’Brien also addressed net debt, stating net debt (excluding leases) was just under £143 million at the half year, before the AC Industries spend. Including the roughly £75 million for AC Industries and normal second-half cash generation, he suggested net debt could be close to £200 million by year-end, while cautioning that currency translation could influence reported figures because the group’s debt is denominated in non-sterling currencies—now mostly Australian dollars.

About Volution Group (LON:FAN)