Codan's Unmanned Surge: Defense Momentum Fuels a Record FY26

A Year of Acceleration

Codan Limited's FY26 results were nothing short of a step change. unmanned systems demand, a full year of Kagwerks, and a relentless engineering pipeline drove group revenue up 30% to $875 million, with EBIT and NPAT rising 67% and 69% respectively. The company's three business units — DTC, Zetron, and Minelab — each contributed, but the standout was Communications, where revenue topped the guided range at $506 million and segment profit margins expanded to 31%, a full 18 months ahead of the 30% target. The order book ballooned 50% year-on-year to $380 million, backing a strong revenue outlook.

Communications revenue grew 22% to $506.2 million, slightly above the top end of the targeted FY '26 15% to 20% range, driven primarily by strong demand for unmanned systems.

That demand is not a one-off. Management pointed to an defense spending upcycle and sovereignty programs, with defense customers now 58% of Communications revenue, up from 38% a year earlier. Unmanned revenue more than doubled to over $215 million, split roughly evenly between conflict and non-conflict geographies, and the company's BluSDR radios are now designed into U.S. military programs of record.

Unmanned Systems Go Mainstream

What makes this quarter notable is not just the growth but the strategic positioning. The acquisition of Adaptive Dynamics (ADI), announced in May, closed in July. ADI brings anti-jamming and interference-mitigation technologies that are critical for contested electromagnetic environments — a direct answer to the next generation of unmanned warfare. As Alf Ianniello explained, "DTC's sweet spot today stretches from the high end of Group 1 through to Group 3" — the medium tactical drone classes where resilient communications are the difference between mission success and failure.

That quote captures the U.S. beachhead. The company is also investing in Asia and Europe, and the order book provides 4–6 months of visibility. The challenge is supply chain: the electronics supply chain is tightening, and while Codan hasn't seen an impact yet, management flagged monitoring. For a business that has beaten its own targets three years running, this is a tempered note of caution.

Minelab's Golden Year

Metal Detection was equally impressive. Gold Monster 2000 and the new flagship GPZ8000 drove Minelab revenue up 42% to $362 million, with segment profit up 65% to $162 million and margins expanding to 45%. The second half alone saw a 15% revenue growth over H1, and the average monthly run rate reached $32 million — a level the company has carried into FY27. Africa, which had been a drag due to regional disruptions, saw a recovery in most regions, while the rest of the world grew 32% on the back of the gold price halo and expanded retail distribution.

This is a quality problem: managing the pace of growth. Ianniello noted that the mid-40s margin is sustainable given reinvestment in marketing and engineering, and the product pipeline is full with countermine and recreational launches.

Outlook and the Path Forward

Guidance for FY27 is for communications revenue growth around 20% — management explicitly said H1 will "significantly exceed" the prior H1, though no seasonality should be assumed. For Metal Detection, the full-year benefit of new products plus an early strong start suggests another strong year. The company's balance sheet is a competitive advantage: net cash of $36 million, a $250 million undrawn facility, and $150 million accordion capacity provide ample firepower for more acquisitions.

The key risks are supply chain and the sustainability of defense budgets, but the company's diversification — Minelab's countercyclical gold exposure and Zetron's public safety recurring revenue — tempers that. As Ianniello said, "Our strategy to build a stronger Codan remains consistent and disciplined." The market appears to agree.

With a 70% dividend hike and a perfect storm of defense demand, gold prices, and product innovation, Codan's FY26 was a banner year. The question is whether it can sustain the trajectory — and the answer, at least for FY27, lies in the order book and the ramp of Adaptive Dynamics.