Reece founder Alan Wilson to step down, profit rises by $107m

Appointed as managing director when the Melbourne-based group was listed in 1974 and staying in the post until 2008, Wilson has been executive chair of the business since 2001 when he took over the position from his late father Leslie Wilson.

Wilson said it had been a privilege to serve as chair, but with the changing profile of the business in recent years, he felt it was the right time for someone new to take his place.

“Time goes so fast. You know you’ve done a hell of a lot, but it’s amazing when you take a moment to reflect on so many highlights,” Wilson said.

“During the 60 years that our family has been involved in Reece, we have been passionate about creating a business that is here for the long-term, working in partnership with our customers, and supporting tradespeople.

“I am so proud of what Reece has become; from humble beginnings with two stores in Melbourne, we are now a global business with over 800 branches and 9,000 people, all striving for greatness every day and relentlessly focusing on serving our customers,” he added.

Deputy chair and non-executive director Tim Poole will take on the acting chair job while also overseeing the process of appointing a successor.

“For over 50 years, my dad has been at the heart of Reece, instilling a deep understanding of our customer and the importance of thinking long term in everything we do,” Group CEO Peter Wilson said.

“His transition to executive director provides us with great continuity and gives him more time to be back out in the Reece network, where he is happiest and where he will help keep our values and culture alive.

“As we look to appoint our next chair, we will do this the Reece way, with a long-term lens and a clear view of the skills and profile we need for our next stage of growth.”

Alongside the chair transition statement, Reece released its FY22 financial results which revealed sales revenue rose by 22 per cent to $7.65 billion, driven by demand and ongoing price inflation across all markets.

The business, which also supplies heating, ventilation, waterworks, air conditioning and refrigeration products, increased its EBITDA by 16 per cent to $838 million despite global supply chain disruptions, which were compounded by geopolitical tensions during the second half of the year.

Working through a backlog of activity, Reece made a strategic investment in inventory which increased from $1.1 billion in FY21 to $1.5 billion, which enabled it to avoid material supply chain disruptions for its customers.

That decision also translated to an increased net working capital to sales ratio of 22 per cent, up from 19 per cent on 30 June 2021, helping the group deliver NPAT up 37 per cent to $392 million.

Sales revenue from Australia and NZ grew by 12 per cent to $3.5 billion as Reece opened three new stores and refurbished 33 branches, bringing its total regional network up to 645.

The group moved into its new purpose-built support centre in Australia, known as ‘The Works’ in April, four months after appointing Marius Vermeulen as CEO of the ANZ business.

In the US, sales revenue increased by a third to $4.1 billion, with normalised EBITDA up 5 per cent to $526 million, with the group benefiting from the favourable foreign currency impact.

Reece managed to reduce income tax by $28 million in the US through a tax benefit relating to the valuation of inventory based on a last in, first out methodology.

“We have navigated another year of disruption and change in FY22 to deliver a very strong result, demonstrating the resilience of our business,” Peter Wilson said.  

“Despite being hit by ongoing challenges, the team successfully navigated the ongoing pandemic, supply chain constraints and natural disasters to continue delivering for our customers, who were busier than ever.”

Looking at FY23, Reece pointed to several external complex macro environment challenges, including a constrained supply chain, persistent inflation and a growing risk of a recession.

“Looking ahead, we believe we are past the peak of the cycle in our end markets and are prepared for softening conditions,” Peter Wilson said.

“The macro setting is complex and will require careful management, but Reece has a strong track record of managing and investing to improve its business through the cycle.”

“We will continue to focus on executing our strategy to achieve our vision of being the trade’s most valuable partner, by delivering brilliant fundamentals, investing in growth to improve our business, and delivering innovation to stay one step ahead of our customers’ needs.”

Reece Group (ASX: REH) shares were up 3.01 per cent to $15.76 as of 10.32am AEST on the back of the announcements.