Investment Case Summary
- The 0.8% headline growth hides a real mix shift into higher-margin Australian retail and council supply.
- Woolworths and Coles compostables grew 39.1% and MyEcoBag now holds 63% and 46% category share.
- The upcoming CEO strategy update and FY26 gross margin will decide whether the re-rate holds.
Woolworths and Coles compostables jumped 39.1% while low-margin resin and white label quietly shrink
MyEco Group (ASX:MCO) delivered FY26 sales of A$15.8m, up just 0.8% on the prior year. On the headline that looks pedestrian. Look one layer down and the story is doing something more interesting.
Australian retail sales grew 22.7% to A$5.4m, with the Woolworths and Coles compostable range up 39.1% on the prior year. Higher-margin Australian retail and council waste now make up 65.6% of group sales, up from 58.0%. The lower-margin resin, white label and US retail lines shrank, and management is comfortable with that.
This is a deliberate mix shift being executed in real time. The top line barely moved because the good revenue was busy replacing the bad revenue. That is a very different business from the one that reported the same A$15.8m a year ago.
New CEO Marie de Perthuis, seven months into the seat, has flagged a fuller growth strategy update in coming weeks. Today’s numbers are the setup for that pitch.
- Updated
- INSIDER CONVICTION TRADES FY26
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Why 0.8% headline growth actually reads as an upgrade
The FY26 print masks two very different businesses running in opposite directions. Australian retail compostables and council FOGO supply grew. White label was down 19.5%, resin down 6.5%, and US retail collapsed 61.6% as tariffs and Middle East supply chain disruption made servicing that market uneconomic.
The mix shift matters because those declining lines were the low-margin, commoditised parts of the portfolio. Management is not fighting to defend them. They are letting them run off while the branded MyEcoBag business grows into the space.
H2 sales were up 4.0% on H1, which is the sequential number the market should probably weight most. It suggests the mix rebalance is now translating into actual growth, not just a change in composition.
The supermarket shelf position is the moat investors underrate
MyEcoBag now holds 63% category share at Woolworths and 46% at Coles in compostable bin liners. Both moved up over the year. Retail shelf position in the two Australian grocery majors is the kind of distribution asset that new entrants struggle to replicate.
The Q4 launch of GRS-Certified Post-Consumer Recycled bin liners at Woolworths, now available nationally, extends the range into a second premium sub-category. Q4 Australian retail sales of A$1.5m were a record, up 36.4% on the prior comparative quarter.
That momentum matters more than the annual growth number because it tells us the ramp is accelerating into FY27, not fading.
The council FOGO story is still a 2030 setup, not a 2026 earnings driver
Council and waste management sales grew 5.9% for the year to A$5.0m, but Q4 dropped 18.0% on the prior comparative quarter on delivery timing. That volatility is worth flagging because it is the sort of number that could easily be misread as a slowdown.
The bigger picture has not changed. NSW mandatory FOGO separation for supermarkets, cafes and hotels started rolling out this month, and the 1 July 2030 household mandate remains the anchor catalyst. MCO added Moira Shire and City of Stonnington to the council roster this year, on top of the Penrith renewal we covered previously.
Our concern is that the market keeps pricing council revenue as if the 2030 pipeline is already banked. It is not. Tender wins between now and then are the actual scoreboard.
The Investors Takeaway for MyEco Group
The FY26 sales print is really a positioning statement. Management has told the market what the higher-quality business looks like, given us a Q4 that runs at a much better growth rate, and now has to convince investors the margin uplift will follow. The CEO’s strategy day, flagged for the coming weeks, is where that case gets tested.
We think the two things worth watching are the FY26 gross margin when the audited result lands, and whether Q1 FY27 confirms the Q4 retail run rate held through the promotion cycle that started 8 July. If both land well, the 0.8% headline number ages very quickly.
For readers who want the earlier chapter of this story, our prior coverage of the Penrith renewal is at stocksdownunder, and it sets up why the council pipeline still matters even when a single quarter wobbles.
