A wise man once said be slow to buy and even slower to sell. I’ve been very patient here. Too patient in hindsight. Today I’ve exited Lindsay Australia.

The original thesis was straightforward. Build scale, diversify earnings, and let operating leverage drive margin expansion.

Revenue is up strongly and the business is larger post SRT and Hunter Acquisitions. But that growth has not translated into better economics. H1 FY26 again showed the same pattern. Revenue up 24.8 percent, EBITDA up 16 percent, and NPAT barely moving once depreciation and interest are accounted for.

That is not just a capital structure issue. It is an execution issue.

The H1 result made it clear. Costs ran ahead of revenue, management did not push hard enough to contain them or price aggressively enough to offset them. In a low margin freight business, that’s a killer. Growth without discipline just dilutes returns.

Looking back, my thesis leaned too heavily on scale leading to pricing power. That has not been proven.

Fuel shock and RTCCO

The recent fuel shock complicates things further.

The Road Transport Contractual Chain Order, or RTCCO, introduced in April 2026, mandates fortnightly fuel cost recovery across road freight contracts. It overrides fixed price agreements and effectively forces customers to absorb fuel increases.

That helps LAU. But it helps everyone else too!

It is defensive, not strategic. It protects margin on road. It does not create pricing power. It also does nothing for rail, which is where LAU has been growing fastest.

Where is the pricing power?

This is the key question, and I have tried to answer it properly.

I have looked for real world signals in industry forums, ag supply chain chatter and freight commentary. If LAU was pushing hard on price, you would expect to see some real noise. I cannot find it. There are no clear leading indicators that LAU is aggressively resetting pricing. Are they wasting a crisis or just with everything going on in Aus jammed between a rock and a hard place?

My uncomfortable conclusion

This is now a business that has grown scale and increased complexity and taken on more debt, but has not proven it can defend margins. I’ve lost my conviction!

At current prices it does not look expensive. But cheap with deteriorating margins, rising interest costs, uneven protection across segments and a management team that has not yet shown a hard commercial edge is not the kind of setup I want to sit in.

So I am out. In exiting, I am crystallising an A$85k loss. Which of course means the share price will almost certainly go up from here….. My loss is very likely your gain. You're welcome.

Cheers

JM