Codan's CEO Alf Ianniello on defence, gold, and what comes next

This interview was filmed Thursday 20th August, 2026.

Combine two high-flying sectors - gold and defence - with consistent operating leverage, and you get the cracking results Codan (ASX: CDA) posted yesterday.

The share price has returned more than 80% over the past 12 months, and the FY26 numbers support it. Revenue up 30% to $875 million, EBITDA margins in the mid-60s on strong operating leverage, and a balance sheet that has drastically flipped from roughly $80 million in net debt to over $35 million in net cash in just 12 months.

In my conversation with CEO Alf Ianniello above, the theme he returns to is consistency.

"It's a consistent Codan story - revenue growth, operating leverage, and cash generation."

The question for investors is whether the conditions that drove the result hold, or whether Codan has been riding tailwinds that could ease.

How durable is the defence growth?

Defence went from 38% to 58% of communications revenue in a single year. Unmanned systems (the drone communications equipment Codan manufactures) doubled and now make up 42% of total communications revenue.

When I asked Ianniello how much of that is tied to active conflicts, and what growth would look like if ceasefires are announced, he pointed to growth doubling in both conflict and non-conflict markets over the year, which gives him confidence the shift isn't purely event-driven.

"It's not binary, it's not 0 or 1. I think you will see a softening, but in some of those conflict zones, they're the largest producer of drones globally. So we would expect those markets will become export markets out of the conflict area."

Minelab's margin expansion drivers

Codan's metal detection business, Minelab, expanded margins from 39% to 45%. The headline assumption is that higher gold prices drove it, but Ianniello says the business has never been able to mathematically correlate the two.

"Obviously it's a significant tailwind and it has assisted, but the other significant tailwind for us is that we actually have developed two great gold detectors that are going into market. So we've seen some great uptake of those products far in excess of our initial assumptions from a launch. 

"So there is a halo effect from gold pricing. It's just not all that."

Two new gold detectors launched during the year and both significantly exceeded initial sales forecasts. The margin expansion from 39% to 45% came from product mix and volume. Gold detectors carry a higher margin than recreational units alongside Codan's dominant position in gold detection.

"When you're selling gold detectors compared to a recreational detector, there is an uptick in margins, so it's predominantly product mix and volume as well."

A supply chain flag for H2

The irony of running so hot is that your supply chain hasn't kept up. Codan's order momentum has significantly outrun its own forecasts, and because electronic components are procured 12 to 18 months in advance, volumes ordered in the prior period were based on a demand picture that no longer applies.

No material issues are evident in H1, but Ianniello flagged it as a potential H2 constraint they are monitoring given global shortages of key electronic components.

"There could be a potential lag to catch up. We're just saying if the momentum continues, that could happen, because nobody can predict...So we've just flagged it because globally there are shortages of key componentry in the products that we manufacture."

M&A on the cards?

The balance sheet gives Codan more room to move than it's had in years. Net debt of roughly $80 million twelve months ago has turned into over $35 million in net cash - a remarkable $100 million swing - with $400 million in undrawn credit facilities alongside it.

M&A focus stays in communications, with a pipeline Ianniello says spans small, medium and large opportunities, however he tempers anything beyond that. "I wouldn't put anything transformational in that bucket at this stage," he says. 

Guidance for FY27

FY27 revenue guidance is for 20% growth in communications, underpinned by continued unmanned systems momentum and a pickup in Zetron, Codan's public safety communications business, which makes radio dispatch systems for emergency services and critical infrastructure operators.

Codan's long-run comms target is 10–15% growth. At 20%, the business is running at the upper end of its own range, a level it's now hit two consecutive years, Ianniello says. 

"What we've seen in Q1, we think will continue," he concludes.