Codan Shares Soar Nearly 24% to Record High as Drone Demand From Conflict Zones Doubles Profit Outlook

ADELAIDE, Australia — Shares of Australian technology company Codan soared nearly 24% to a record high on Tuesday after the company sharply raised its profit outlook, citing exceptionally strong demand for its communications equipment from conflict regions.

Codan stock closed at 64.43 Australian dollars, up 12.44 Australian dollars, or 23.93%, making it the best performer on the benchmark S&P/ASX 200 index. The shares had closed at 51.99 Australian dollars on Monday.

The rally lifted the Adelaide-based company's market value to about 11.7 billion Australian dollars ($8.2 billion), based on Tuesday's closing price, cementing its position as the largest company in the ASX technology sector. Earlier in the session, Codan overtook logistics software giant WiseTech Global for that title.

Profit set to more than double

In a trading update released before the market opened, Codan said it now expects group net profit after tax of at least 160 million Australian dollars for the first half of fiscal 2027, the six months ending in December. That would be more than double the 71.2 million Australian dollars it reported for the same period a year earlier, subject to final product mix and shipments.

The first-half figure alone would equal about 91% of the 175.2 million Australian dollars in net profit the company earned for the entire fiscal year that ended in June.

The upgrade was driven by Codan's communications business, which supplies equipment to defense, military and public-safety customers. The company now expects first-half communications revenue of 400 million to 410 million Australian dollars, up 80% to 85% from 221.8 million Australian dollars a year earlier.

Codan said about half of that revenue is expected to come from conflict regions, compared with about 20% in the same period last year. Outside those regions, growth in the division is running at around 20%, the company said.

"Demand from conflict regions is currently exceptionally strong, reflecting the proven performance and reliability of our technology in these contested environments," the company said in a statement.

Margins widen

Codan also said it expects the communications division's earnings before interest and tax margin to reach about 40% in the first half, up from 26% a year earlier and 31% for fiscal 2026.

The company lifted its fiscal 2027 growth target for the communications business to 30% to 40%, up from its previous forecast of about 20%.

Codan's communications unit includes its drone-radio business DTC, which it acquired in 2021 for 114 million Australian dollars. The business has benefited from rising demand for battlefield communications, electronic warfare and unmanned systems, as defense spending climbs and geopolitical tensions intensify, including conflicts in the Middle East and Ukraine.

The communications business accounted for more than half of group revenue in both fiscal 2025 and fiscal 2026.

Gold detectors also shining

Codan's metal detection division, Minelab, is also performing well. The company said Minelab's first-half sales run rate is tracking slightly ahead of the second half of fiscal 2026.

The division has been supported by sales of its flagship GPZ 8000 gold detector and its Gold Monster 2000 fine-gold detector, along with favorable gold prices that have encouraged prospecting activity.

A remarkable run

Tuesday's surge extended an extraordinary rally for Codan, which has become one of the best-performing stocks on the Australian market this year. Before Tuesday's gain, the shares had more than doubled over the past 12 months.

Each of Codan's last four major updates has sent its stock sharply higher. A trading update in January lifted the shares 16.8%, while an April guidance upgrade sent them up 15.4%. In August, the company reported record fiscal 2026 results, with net profit up 69% and its dividend raised 70%, sending the shares up 12.4% to a record at the time.

The company said in August that its communications division had already reached a 30% profit margin, a target it had not expected to hit until the end of fiscal 2027.

Codan, led by CEO Alf Ianniello since early 2022, joined the S&P/ASX 100 index on Sept. 1.

Tech sector leads market

Codan's rally helped push Australia's information technology sector up 4.6% on Tuesday, making it the best-performing sector on the ASX 200.

Data center network provider Megaport also surged after announcing three new artificial intelligence infrastructure contracts worth nearly 1 billion Australian dollars and raising its fiscal 2027 revenue guidance.

The broader ASX 200 closed up 0.34% at 8,709.3, recovering from a brief dip after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.60%, its highest level in about 15 years. The central bank said higher global energy prices tied to the widening Middle East conflict and demand linked to AI were adding to inflation pressures.

Defense spending tailwind

Codan's results highlight how rising global defense budgets are reshaping the fortunes of companies that supply military technology. Governments across Europe, Asia and the Middle East have increased spending on drones and secure communications systems, as recent conflicts have shown the importance of unmanned systems on the modern battlefield.

Still, the company's growing reliance on conflict regions could draw scrutiny from investors. Analysts have questioned whether demand from active war zones can be sustained over the long term and whether Minelab's gold-driven growth will continue if gold prices ease.

Gold prices have recently pulled back from record highs, falling sharply on Monday as rising U.S. Treasury yields and expectations of further Federal Reserve rate increases weighed on the precious metal.

Codan is scheduled to report its full first-half results in February. Investors will be watching for updates on order books in its communications business, the share of revenue coming from conflict regions and the performance of Minelab's latest detectors.

For now, the company's latest update has once again exceeded market expectations, adding to a string of upgrades that has made Codan one of the standout performers on the Australian stock market in 2026.