Propel Funeral Partners (ASX:PFP) has reported significant growth in its revenue and earnings for the first half of fiscal year 2026, driven by an increase in funeral volumes and ongoing acquisition activities. The company’s Co-Founder and Co-CEO, Lilli, announced that first-half revenue rose by 3.1% to AUD 118.8 million. This growth was largely attributed to a 3% increase in total funeral volumes, which included contributions from recent acquisitions.
In terms of pricing, Propel indicated that the comparable average revenue per funeral increased by approximately 2% compared to the prior corresponding period (PCP). The network’s average revenue per funeral remained steady in line with the PCP, reflecting the company’s ability to maintain its pricing strategy amidst market fluctuations.
Financial Performance and Cost Management
Chief Financial Officer Arash Noaeen stated that the gross margin for the first half was 69.7%, consistent with the previous fiscal year. Operating costs were well controlled at about 44% of revenue, which was favorable compared to FY2025 and in line with the PCP. Noaeen attributed the revenue performance primarily to higher funeral volumes and noted that total funeral volumes had risen by 3%.
Notably, the operating EBITDA margin stood at 25.5%, slightly lower than the PCP by 0.5%. This decline was primarily due to the impact of recent acquisitions and shifts in the revenue mix. Propel’s disciplined approach to cost management was evident, with comparable operating costs increasing by only 1.6% relative to the PCP, a figure below the current inflation rate.
Operating cash flows for the period grew by 2.6%, achieving a cash conversion rate of over 95%. Propel also reported acquisition-related expenses amounting to AUD 1.8 million, alongside earn-out payments of AUD 0.4 million. The company acquired four freehold properties—three of which were previously leased—costing AUD 6.2 million and also incurred capital expenditure of approximately AUD 12.3 million.
Debt Management and Shareholder Returns
As of December 31, 2025, Propel reported net debt of AUD 142.8 million and highlighted that its freehold properties are valued at depreciated costs amounting to about AUD 245 million. The company’s prepaid contract funds totaled roughly AUD 83 million, primarily invested with third-party friendly societies.
On the capital management front, Propel announced an agreement with Westpac to extend the maturity of its existing AUD 275 million debt facilities from October 2027 to October 2029. This extension, along with improved pricing, is projected to yield annualized interest cost savings of approximately AUD 0.7 million. The company also established a new AUD 50 million accordion facility, giving Propel a total of AUD 182 million in available funding capacity.
The board declared an interim dividend of AUD 0.075 per share, fully franked, up from AUD 0.074 in the PCP, reflecting a payout ratio of 83%.
Propel has expanded significantly since its inception, growing from a single funeral home in Queensland in 2013 to 208 locations across Australia and New Zealand, including 41 cremation facilities and 9 cemeteries. The company currently owns 126 of these locations, with a total cost on the balance sheet exceeding AUD 245 million.
Industry Trends and Future Outlook
Co-Founder and Co-CEO Fraser Henderson highlighted demographic trends as a key long-term driver for the funeral industry, noting that the number of deaths is expected to rise in both Australia and New Zealand. According to forecasts from the Australian Bureau of Statistics, death volumes are projected to increase by 2.9% per annum from 2026 to 2035, and by 2.4% annually from 2036 to 2045. Similarly, Stats NZ anticipates a 2% annual increase from 2026 to 2035, tapering to 1.8% from 2036 to 2045.
Despite the company’s growth, Henderson noted that the funeral market remains highly fragmented. Propel estimates its market share has expanded from approximately 1% in 2015 to about 10% in 2025, with many independent operators still in play. During this half, Propel completed two acquisitions, adding three locations, and has committed AUD 306 million to acquisitions since its IPO in 2017.
While management refrained from providing specific short-term updates, they reported no major surprises in the third quarter thus far. Henderson acknowledged that the second half will be compared against a 3% contraction in comparable funeral volumes from the previous year, including a significant contraction experienced in Australia during the three months ending April 30, 2025.
In summary, Propel Funeral Partners is navigating the complexities of a growing industry while maintaining a focus on disciplined cost control and strategic acquisitions, positioning itself well for future challenges and opportunities.
