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Reece (ASX:REH) share price soars 19% on HY24 result

The Reece Ltd (ASX: REH) share price jumped more than 17% after reporting its FY24 first-half result.

Reece is the largest bathroom and plumbing business in Australia.

FY24 first-half result

Here are some of the highlights from the six months to 31 December 2023:

Breakdown

In ANZ, it said sales revenue increased 2% to $1.97 billion, adjusted EBITDA grew 7% to $307 million, statutory EBIT increased 18% to $233 million and adjusted EBIT increased 6% to $233 million.

Over the half-year period, ANZ said five branches relocated, six refurbished, one closed and one new branch opened. At the end of the half if had 655 locations across ANZ, with a pipeline of incremental network activity planned for the second half.

In the US, revenue rose slightly to $1.68 billion amid a subdued trading environment. Adjusted EBITDA rose 6% to US$143 million and adjusted EBIT rose 2% to US$87 million.

Reece has been trying to lift all aspects of the business and building scale. During the half, nine new branches were opened, taking the total to 240 stores. It’s steadily rebranding stores to Reece – it now has 62 branches trading as Reece in six states.

Outlook for the Reece share price

Reece said it’s anticipating a subdued demand environment to continue, with a softening in the Australia and New Zealand region. The medium to long term industry fundamentals remain “supportive”.

The ASX share said its approach remains unchanged, where it outlined three areas.

First, there’s the focus on the customer proposition and being brilliant at the fundamentals. Second, taking a disciplined approach to costs while maintaining the customer proposition. Third, investing through the cycle to build a stronger business.

Overall, I think Reece is proving to be a strong business, with a great management team. The tricky thing is that it’s priced expensively considering the relatively slow growth it’s expecting in the foreseeable future.

I’m happy to wait for a better entry price and to look at other ASX growth shares.

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