Codan has issued yet another profit upgrade

Codan Ltd (ASX: CDA) has upgraded its profit and revenue outlook yet again, with strong demand for drone technology driving the increases.

Upgrade just a month after last update

The company last upgraded its profit outlook in late September, saying it would generate net profit of $160 million on revenue of $400-$410 million in the first half of this financial year.

Chief Executive Officer Alf Ianniello told the company's annual general meeting on Tuesday that they now expected to do slightly better than this, with revenue expected to be $410-$420 million and net profit to be not less than $162 million for the first half.

This profit level compares to $71.2 million in the first half the previous year, and a full year result for FY26 of $175.2 million.

Mr Ianniello said Codan was experiencing, "unprecedented levels and pace of demand for unmanned systems in conflict areas'', while outside of conflict areas the company's communications division is expected to grow by about 20%.

The company's Minelab metal detector business is tracking to book revenue for the first half which is slightly above that booked in the second half of FY26.

Mr Ianniello said of the outlook for the second half:

Regarding the full-year FY27 outlook for the Communications segment, while current indications are that the elevated sales order momentum may continue into the second half, order visibility in conflict regions is low and it is too early to determine whether the elevated demand and margin experienced in first-half FY27 will continue in second-half FY27. Balancing these factors, Codan is currently targeting full-year FY27 revenue growth for the Communications segment to be at the upper end of the previously announced 30% to 40% range compared to full-year FY26.

Shares performing strongly

Codan shares are currently up 86.8% over a one-year period and are changing hands for $62.69.

They recently hit a record high of $70.14.

Mr Ianniello said Codan was continuing to invest in the business, with $78 million spent on engineering over FY26, representing about 9% of group revenues.

He said:

This investment ensures the Group remains at the forefront of innovation and product development, supports our competitive positioning and drives our organic growth strategy. Our investment continues to be focused on future technologies including multi-waveform radios, AI-enabled dismounted soldier ecosystems, next-generation cloud-based command and control capabilities, and new detection products across recreational, gold and military markets. In FY26, ongoing innovation across our BluSDR range led to DTC securing its first orders for the sale of radios into multiple programs of record (PORs) for US military initiatives to drive sovereignty.

Codan is valued at $11.43 billion.

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