Highlights

  • FY26 EBITDA guidance cut to $8.5–$9.0M, down sharply from the earlier forecast of $12.7–$13.5M.
  • EGL Energy impacted by ERP issues and higher diesel costs, though Demand and Revenue growth remain strong.
  • EGL Baltec hit by shipping delays and Middle East logistics disruption, pushing project deliveries into FY27.

Overview

The Environmental Group Limited (ASX:EGL) has revised its FY26 normalised EBITDA guidance downward to $8.5–$9.0 million from the earlier $12.7–$13.5 million range, reflecting operational and logistics-related challenges across key divisions. EGL Energy experienced ERP implementation issues affecting Job cost allocation and higher-than-expected fleet diesel expenses, although underlying demand and revenue growth remain intact. Meanwhile, EGL Baltec faced significant delays in project deliveries due to global shipping disruptions and weaker tender activity in the Middle East. Despite these headwinds, the company noted that its Clean Air and Waste divisions remain stable, with no material change to their outlook for FY26 performance.

Did Operational and System Issues Drive the Downward Earnings Revision at EGL?

A key reason for the downgrade was operational disruption within EGL Energy following the implementation of a new ERP system in February 2026. The system issues affected job-level cost allocation and recovery processes, leading to a one-off adjustment and reduced profitability visibility. Additionally, higher fleet diesel costs further pressured margins, although part of this was offset through pricing adjustments and recoveries. Importantly, management clarified that revenue growth and customer demand remain strong, and underlying margins are largely unchanged.

How Did Global Supply Chain Disruption Impact EGL Baltec’s FY26 Outlook?

EGL Baltec’s performance was affected by global shipping and port disruptions, particularly across Middle East trade routes. Several projects scheduled for completion in FY26 were delayed, with completed goods awaiting shipment pushed into FY27 delivery timelines. The Business, which relies heavily on logistics through key routes such as the Suez Canal, also experienced slower tender awards. These combined factors reduced FY26 EBITDA expectations by approximately $1.5 million, though management expects normalisation once logistics conditions stabilise.