EPC Group: Net Income Up by 22%, but Free Cash Flow Drops by 44%
EPC Group closed the 2025 fiscal year on a profitable growth trajectory: revenue up by 6% to €591.9M, improved EBITDA margin at 13.6%, and net income increasing by 22.3%. However, free cash flow fell to €22.4M, down from €40.0M the previous year, highlighting the tension between the group's operational performance and its self-financing capacity amidst massive investments and the acquisition of Pirobras in Brazil.
Operational Overview
Operationally, EPC Group maintained its course in 2025. The consolidated revenue reached €591.9M, up by 6.0% at constant exchange rates and scope. Growth remained solid in the core business of Explosives and Mining Drilling (+4.5%) despite a challenging economic environment affected by electoral deadlines in West Africa (Ivory Coast, Guinea, Cameroon). The Urban Mining activities showed a significant expansion of 9.1% after a year 2024 penalized by the Paris Olympic and Paralympic Games. The Europe Mediterranean America region particularly supported the dynamic (+10.2%), driven by ramping up in Canada and growth in Morocco. EBITDA increased by 13.6% to €80.3M, yielding a margin of 13.6% compared to 12.7% a year earlier.
Financial Performance and Cash Flow Challenges
The consolidated net income reached €30.4M, growing by 22.3%, with a net margin increased to 5.1% versus 4.5% in 2024. However, this profitability improvement contrasts sharply with the deterioration in cash flows. The free cash flow stood at only €22.4M, marking a drop of €17.6M (-44%) compared to €40.0M recorded in 2024. This decline results from two major factors: on one hand, the operating cash flow fell to €59.0M from €67.0M (-€8.0M), penalized by an increase in working capital needs linked to business growth; on the other hand, investments amounted to €36.6M, including €28.1M in fixed assets and the strategic acquisition of Pirobras in Brazil for €9.7M. Nevertheless, the group strengthened its balance sheet position: cash reserves stood at €40.0M (+€9.3M), supported by the issuance of new loans and a Canadian dollar credit line of CAD 25 million.
Dividend Proposal and Strategic Developments
Despite the decrease in free cash flow, the Board of Directors proposes a dividend of €3.00 per share, doubled compared to 2024, for a payout ratio of 24% of net income. This decision reflects the management's confidence in the robustness of the economic model. Debt ratios improved: net gearing returned to 24% versus 28% at the end of 2024, and the financial leverage ratio came out at 0.89 times EBITDA. The group is also engaging in a major strategic project: exclusive discussions with the Swiss Society of Explosives aiming to create the European leader in civilian explosives, with completion expected in the third quarter of 2026. In the short term, the year 2026 begins under strain: geopolitical tensions in the Arabian Gulf threaten the supply of ammonia and urea, critical raw materials for the production of ammonium nitrate. EPC Group must manage an increase in energy and logistics costs while maintaining its growth objectives and investment effort to support its clients.
