G8 Education reported a 73.7% drop in first-half operating profit as Australia’s childcare sector grappled with persistently low occupancy rates and rising costs. The company’s operating net profit after tax fell to A$6.7 million in the six months to June 30, 2026, from A$25.6 million a year earlier, while statutory net losses widened to A$38.8 million, largely due to A$47 million in impairments tied to suspended centers.
Revenue declined 12% to A$409.1 million, with operating earnings before interest and tax down 63.7% to A$14.7 million. The operating EBIT margin compressed to 3.6%, a decline of 5.1 percentage points, as center-level operating EBIT fell 37.7% to A$44.5 million despite a 10.9% margin.
Average group occupancy dropped to 57% in the first half, a decline of 7.5 percentage points from the prior year, with spot occupancy at 61.9% as of August 21, 5.1 points below the prior-year level. Year-to-date occupancy stood at 58% at the end of July, still 7 percentage points lower than the same period in 2025. Supply growth moderated to 2.5% in the latest quarter, the slowest pace in a decade.
G8 suspended operations at 40 centers in April 2026 and reduced its support office workforce by 21% in June as part of a restructuring program aimed at delivering at least A$10 million in annualized savings. Half of those savings were realized in the first half, with the remainder expected in the first half of 2027. Capital expenditure totaled A$22.1 million in the period, with full-year 2026 capex projected at A$50 million.
The company extended its A$100 million revolving credit facility maturity from December 2027 to January 2029 and reported net debt of A$123.6 million with a 20% gearing ratio. Operating cash inflows fell 42.2% to A$49.4 million, while net finance costs rose 20.5% to A$4.7 million. No interim dividend was declared for the period.
Despite the challenges, G8 highlighted improvements in staff retention, with team retention increasing to 80% and early childhood teacher retention reaching 85%. Internal promotion rates for center managers climbed to 73%, up from 41%, while employee engagement and psychological safety scores stood at 77% and 75%, respectively. The company also reported a 7-point rise in its Net Promoter Score to 58 and a 2 percentage-point improvement in enrolment conversion rates.
Quality standards remained strong, with 97.4% of centers meeting or exceeding the National Quality Standard, 6 points above the sector average. Scope 1 and 2 carbon emissions fell 18%, while waste reduction improved by 11% and recycling rates increased by 18%. Solar installations across 49 sites generated 506 MWh of power, and female representation on the board exceeded 50%.
