PWR Earnings: Costs Uptick Ahead of Ramp-Up in Aerospace and Defence

Principally, two factors steered PWR’s fiscal 2024 result to be worse than expected: slower revenue growth in motorsport and sharply higher employee expenses. The underlying net profit of AUD 25 million was a 10% improvement on fiscal 2023 but about 10% below our prior estimate. Employee costs were 21% higher, about AUD 3 million higher in the second half than the first. There is more to come in fiscal 2025 as the business ramps up hiring ahead of a significant step-up in the aerospace and defence work from fiscal 2026. We lower our fiscal 2026 net profit forecast by 18% to AUD 27 million—primarily due to higher employee expenses and a softer near-term outlook. However, we make only minor adjustments to our longer-term forecasts as revenue catches up with the higher cost base. We maintain our AUD 9 fair value estimate as the time value of money offsets the near-term downgrade.