New data from KPMG Australia indicates a significant decline in the number of “zombie companies” listed on the ASX. Over the past six months, the number of distressed firms – those exhibiting prolonged financial weakness while continuing to trade – has decreased by 41 per cent. This represents a drop from a peak of 180 in September 2024, to 153 in March 2025, and further down to just 90 in September 2025. KPMG Australia is a professional services firm providing audit, tax, and advisory services. They aim to turn insights into opportunities for businesses.
The average size of these companies is also diminishing. The combined market capitalisation of ASX-listed zombie companies has plunged by $1.08 billion over the half-year, settling at $525 million. KPMG attributes this turnaround to several factors, including lower borrowing costs, improved consumer sentiment, and robust commodity prices. Additionally, investor optimism is being bolstered by global stock market highs and substantial investment in AI and data centre infrastructure.
Gayle Dickerson, head of turnaround and restructuring at KPMG, noted that “growth in stock market valuations, lower interest rates and increased consumer sentiment are allowing businesses the extra breathing room to keep themselves solvent.” However, she cautioned that the recovery remains fragile, citing ongoing geopolitical risk and the potential for higher interest rates should inflation persist.
The Raw Materials and Natural Resources sector continues to have the highest proportion of distressed companies, accounting for 36 per cent of all zombie firms, despite also experiencing the most significant reduction in numbers. Together with healthcare and manufacturing, these three sectors comprise 57 per cent of all zombie companies on the ASX. Geographically, Western Australia has the highest concentration of these firms (35), followed by New South Wales (20) and Victoria (19).
