Rising LeverageLeverage increasing to roughly 1.06x reduces balance-sheet flexibility and raises refinancing and interest-rate risk. With still-modest margins, higher debt amplifies downside if growth stalls, constraining capital allocation and potentially forcing trade-offs between growth investment and debt servicing over the medium term.
Thin Net MarginsA net margin near 3% provides a limited buffer against input-cost inflation, pricing pressure, or order volatility. Even with resilient gross margins, low absolute net profitability leaves the company vulnerable to reverting to losses if volumes decline or pricing/energy costs rise, challenging sustained cash generation.
Historic Earnings VolatilityA track record of multi-year losses before the FY2025 turnaround highlights execution and demand cyclicality risks. The prior inability to sustain profits suggests the current recovery could reverse under adverse conditions, making consistent medium-term earnings delivery less certain for creditors and customers.