SPC Global (ASX:SPG) cuts leverage below 2x and FY27 cash story works

A A$100m raise and A$8m Mill Park payback reshape the free cash flow trajectory.

SPC Global (ASX:SPG) has delivered a Q4 FY26 update that quietly does more heavy lifting than the headline growth numbers suggest. Normalised EBITDA is on track for roughly 25% growth on FY25’s A$30.3 million, but the more interesting story sits below the operating line.

Net leverage has dropped from 3.9 to 4.0 times EBITDA to under 2 times at year end, with management guiding to 1.0 to 1.2 times in FY27. Annual interest expense is set to fall from around A$15 million in FY26 to A$5 million to A$6 million next year. That is roughly A$9 million of pre-tax cash flow returned to shareholders without lifting a single carton off a production line.

The four-in-one food group we wrote about at listing is now showing what the integration was actually supposed to do. Beverages net sales revenue grew 11.7% domestically, Nature One added A$5.5 million in Q4 international sales, and the Costco Japan ranging win opens a genuinely large juice market. The turnaround from a leveraged, cash-negative business to something approaching free cash flow generation is the real signal here.

The domestic mix shift is doing more work than the growth rate suggests

Beverages up 11.7%, tomatoes up 3.5% and baked beans up 4% are respectable numbers for a mature Australian grocery business. But the more important line is the 5.2 percentage point lift in branded, higher-margin product mix.

That mix shift is where SPC’s earnings quality actually improves. Ardmona becoming the exclusive Australian branded canned tomato at Woolworths matters because private label has been eating into legacy SPC categories for years. Winning back shelf position in a duopoly retail market is a structural, not cyclical, gain.

The On-The-Go channel push, including Naked Life sodas into 400 Ampol sites plus new Amazon and Costco Australia distribution, adds incremental margin without heavy capex. This is exactly the sort of channel diversification that a business dominated by supermarket relationships needs to lift blended margins.

International is punching above its weight and Costco Japan is the sleeper win

Nature One added A$5.5 million in Q4 international revenue, up around 50.8% year on year, across China, Indonesia and South Korea. Management flags that international currently contributes a disproportionately high share of Group profitability relative to revenue.

The Original Juice Co. Black Label listing at Emart Traders in South Korea generated over A$1.2 million in under 12 weeks, with a three-year revenue expectation of A$10 million from that single SKU line. The Costco Japan ranging, commencing late August 2026, plugs into a US$9.8 billion juice market growing at a 3.3% CAGR.

We think the international story is where a re-rating case could genuinely form. Australian food brands rarely crack tier-one Asian retail at scale, and the Emart traction is early evidence the export model repeats rather than being a one-off promotional hit.

The Mill Park closure and Shepparton consolidation is the FY27 earnings kicker

The Mill Park closure, Juice Lab move to Shepparton and Griffith co-packing arrangements are on track for Q1 FY27 completion. Management guides to roughly A$8 million EBITDA benefit in FY27 with a sub-12-month payback and an annualised run rate exceeding that figure.

Stack that against the A$9 million interest expense reduction and the FY27 outlook looks quite different from FY26. Add ongoing synergy delivery, roughly A$9 million already banked in FY26 across SG&A, procurement and supply chain, and the operating leverage into next year becomes hard to ignore.

Our concern is that Shepparton restructuring always carries labour and community friction risk, particularly in regional Victoria. Consultation is still underway on the operating model changes, so execution on the manufacturing side is not fully de-risked yet.

The Investors Takeaway for SPC Global

SPC Global has moved from being a leveraged rollup story to a business with a credible cash generation thesis. Normalised EBITDA to free cash flow conversion improving from negative 75% in FY25 to negative 15% to 20% in FY26 pre-raise is the metric that changes how this stock should be valued. Turn that positive in FY27, as management is guiding, and the multiple has room to expand.

The three catalysts to watch over the next 12 months are the actual free cash flow print in the FY27 result, Costco Japan sell-through data once ranging begins in late August, and confirmation the Mill Park closure lands its A$8 million on schedule. Investors can read our earlier coverage of the four-company structure at stocksdownunder for the full backdrop.