The largest IPO on the ASX in 2023 was a family business founded by a migrant back in 1965. Redox (ASX:RDX) listed in July 2023 with a market capitalization of $1.3 billion. The market capitalization has now grown to $1.8 billion. During the IPO they raised $402 million.
The business is dominated by the Coneliano family who hold about 50% of the shares on issue. The CEO is Raimond Coneliano who is the grandson of the founder, Roland, who passed away in 2017. Richard Coneliano is the Chief Operating Officer and largest shareholder, and Renato Coneliano is an executive director. Three of the six board members are members of the family.
Redox is an importer and distributor of chemicals, ingredients and raw materials. They are headquartered in Sydney and have over 100 stock locations. They source over 1,200 product groups from over 1,000 suppliers and distribute them to over 7,000 customers. The products cover a wide range of industry segments as shown in the chart below.
Source: Redox, FY24 Results Presentation, 22/8/24
85% of sales are generated from Australia with the remainder coming from New Zealand, USA and a sliver from Malaysia. North America is a particular focus for future growth. It was the only region to experience positive revenue growth in the last year, as shown below. Growth in written invoice sales in North America was 36% with strong volumes growth but muted revenue growth due to price headwinds. They are focused on expanding their North American footprint.
Source: Redox, FY24 Results Presentation, 22/8/24
Overall revenue fell 9.6% in FY24 as shown in the table above. This was due to pricing pressure as prices continued to normalise following the disruptions caused by Covid and the subsequent supply chain crunch.
Despite the fall in revenue, Redox managed to produce an increase in profits driven by improvements in gross profit margins which increased by 2.6%. They managed to optimise their product mix and manage their costs to still generate profit growth. One of their competitive advantages is their in-house built software system which gives them an edge managing customer requirements and inventory levels.
As most of their products are imported, sea freight costs are an important factor. During…
