The Reliance Worldwide Corporation Ltd (ASX: RWC) share price is in focus after the company announced further steps in its global manufacturing footprint rationalisation. Reliance Worldwide expects a US$9 million annual uplift to group operating earnings by the end of FY27.
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What did Reliance Worldwide report?
- Planned closure of brass casting, forging, and machining operations in Moorabbin and Braeside, Victoria, plus smaller sites.
- Expected net annual EBITDA benefit of US$9 million across the group by end FY27.
- One-off net charge of US$100 million to US$110 million in FY26 (excluded from operating earnings).
- Around 85 employees impacted by Australian brass manufacturing closures.
- Transition of APAC brass component supply to third-party Asian vendors in 2025.
What else do investors need to know?
These manufacturing changes follow a steady decline in demand for brass production in Australia. This is due in part to Reliance Worldwide's investment in automating its Alabama facilities and designing products that use less brass, alongside a strategy to increasingly replace brass with stainless steel.
The company anticipates an adverse EBITDA impact of US$9 million on APAC region results after the closures. However, these are expected to be more than offset by an estimated annual Americas region benefit of US$18 million.
What's next for Reliance Worldwide?
Reliance Worldwide's focus moving forward is on sourcing from third-party vendors and ongoing optimisation of its supply chain. The company expects its overall brass requirements to continue declining, supporting a shift towards more cost-effective materials and manufacturing strategies.
Management anticipates these steps will deliver net financial benefits from FY27, with project cash outflows mainly relating to redundancy and asset exit costs, and the bulk of the one-off charges non-cash in nature.
Reliance Worldwide share price snapshot
Over the past 12 months, Reliance Worldwide shares have declined 12%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.
