Downer EDI Ltd
NZX:DOW
Downer EDI Ltd
Downer EDI Ltd, founded in Australia, has evolved into a formidable player within the infrastructure and service sectors, with its roots tracing back to major engineering undertakings and groundbreaking construction projects. This transformation into a leading integrated services provider speaks volumes about its ability to adapt and thrive amid ever-changing market demands. Downer's core offerings center around urban services, entailing the maintenance and enhancement of essential infrastructure in transportation, telecommunications, utilities, and facilities management. By leveraging its rich history and engineering expertise, Downer positions itself as a critical contributor to the upkeep and modernization of cities, crafting sustainable solutions that cater to both government and private sector clients.
The company's revenue streams are drawn from a broad spectrum of contracts, which include long-term agreements to manage and maintain public assets. For instance, Downer is heavily involved in ensuring the smooth operation of rail networks, roads, and public transport systems, which, in turn, generates steady cash flow and bolsters its financial stability. In addition, its prowess in providing cutting-edge design and manufacturing solutions for circumspect sectors like energy and technology allows it to capture lucrative niches in an ever-diversifying economy. As Downer EDI Ltd adeptly maneuvers through competitive landscapes, its commitment to delivering quality and efficiency remains at the forefront, enabling it to sustain growth while continually exploring new opportunities within the realms of essential services provision.
Downer EDI Ltd, founded in Australia, has evolved into a formidable player within the infrastructure and service sectors, with its roots tracing back to major engineering undertakings and groundbreaking construction projects. This transformation into a leading integrated services provider speaks volumes about its ability to adapt and thrive amid ever-changing market demands. Downer's core offerings center around urban services, entailing the maintenance and enhancement of essential infrastructure in transportation, telecommunications, utilities, and facilities management. By leveraging its rich history and engineering expertise, Downer positions itself as a critical contributor to the upkeep and modernization of cities, crafting sustainable solutions that cater to both government and private sector clients.
The company's revenue streams are drawn from a broad spectrum of contracts, which include long-term agreements to manage and maintain public assets. For instance, Downer is heavily involved in ensuring the smooth operation of rail networks, roads, and public transport systems, which, in turn, generates steady cash flow and bolsters its financial stability. In addition, its prowess in providing cutting-edge design and manufacturing solutions for circumspect sectors like energy and technology allows it to capture lucrative niches in an ever-diversifying economy. As Downer EDI Ltd adeptly maneuvers through competitive landscapes, its commitment to delivering quality and efficiency remains at the forefront, enabling it to sustain growth while continually exploring new opportunities within the realms of essential services provision.
Margin Expansion: Downer delivered its highest EBITA margin in over a decade at 4.6%, up 90 basis points, and is on track to exceed its >4.5% margin target across FY '25 and '26.
Profit Growth: Underlying NPATA rose 7% to $136 million, statutory NPAT jumped 30% to $98 million, and underlying EBITA increased 11% to $227 million.
Revenue Decline: Underlying revenue fell 3.6% versus the prior period, in line with expectations, due mainly to softness in Transport and Energy & Utilities, but Facilities grew.
Strong Cash Flow: Normalized cash conversion exceeded 90%, and free cash flow reached $105 million, supporting dividend and buyback activity.
Order Book Growth: Work-in-hand increased 8.9% to $38.2 billion, with Energy & Utilities and Facilities seeing especially strong gains.
Dividend and Buyback: Interim dividend increased 19% to $0.129 per share (100% franked), and the share buyback (up to 5% of shares) is underway.
FY26 Guidance: Downer expects underlying revenue to be slightly lower than FY '25, but EBITA margin and NPATA are guided to improve, with NPATA targeted between $295 million and $315 million.
Balance Sheet Strength: Net debt to EBITDA reduced to 0.8x, with over $680 million in cash and strong capacity to fund growth.
