Codan Limited has delivered a significant trading update for H1 FY27 that materially raises investor expectations for the full year. The company now expects group net profit after tax of not less than $160 million, more than double the $71.2 million reported in the prior comparable period. This represents a substantial upgrade driven by exceptional demand momentum in the Communications segment, though the magnitude of the upside carries meaningful execution and forecasting risks.
The Communications segment is the primary growth driver. Revenue is now expected to reach $400 million to $410 million in the half, compared to $221.8 million in the prior period, representing growth of approximately 80 percent. What makes this performance particularly noteworthy is the dual nature of the demand. Outside conflict regions, Communications is tracking to approximately 20 percent growth on a like-for-like basis, reflecting broad-based global demand for the company’s unmanned systems and communications technologies. Demand from conflict regions has proven exceptionally strong, now representing approximately 50 percent of segment revenue in H1 FY27 versus 20 percent in the prior period. This is a significant mix shift that has material implications for both revenue magnitude and earnings quality.
The margin expansion story is equally compelling. The Communications segment is expected to deliver EBIT margins of approximately 40 percent in H1 FY27, compared to 26 percent in the prior period and 31 percent in full-year FY26. This margin uplift reflects the operating leverage inherent in the business model when demand reaches such elevated levels. However, Codan has explicitly flagged that demand from conflict regions is difficult to forecast beyond three months, and the company cannot yet determine whether these margins will persist into the second half. This uncertainty is a meaningful caveat to the headline numbers.
The Metal Detection division, operating under the Minelab brand, has delivered a solid start to the year. Revenue is running slightly above the levels achieved in H2 FY26, supported by newly launched metal detection equipment, a favourable gold price environment, and continued expansion in rest-of-world markets. While the growth is steady rather than exceptional, Minelab’s contribution to group earnings remains valuable and provides some diversification to the earnings stream.
For the full year FY27, Codan is targeting Communications revenue growth in the range of 30 to 40 percent compared to FY26 revenue of $506.2 million. This guidance is deliberately conservative around the second half given the unpredictability of conflict-region demand patterns. Investors should monitor quarterly results for evidence of whether the elevated order momentum continues, whether supply chain constraints prove material to execution, and whether margins remain at the elevated levels seen in the first half.
The announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Codan Limited (ASX: CDA)
Codan Limited is a global electronics and engineering business that designs and manufactures rugged hardware, software, and embedded systems for security, military, communications, and consumer markets. The company operates through two main divisions: Communications, which provides HF radios, encryptors, and tactical communication systems to government and military customers; and Metal Detection, which supplies metal detectors to consumer and mining sectors. Codan’s products are sold to customers in more than 150 countries across government, security, military, humanitarian, and commercial markets.
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