Downer EDI shares surge as earnings edge out forecasts
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More news: Downer EDI was the best performing stock across the ASX 200 in morning trade, after reporting FY24 earnings that beat consensus estimates.
Downer shares were up 17.1% to $5.60 by 11:25am AEST, having gained more than 25% since the start of 2024.
UBS analysts noted that the result was "slightly ahead" of consensus estimates, according to Visible Alpha data, with FY24 EBITA 2% above average forecasts.
They said earnings were supported by ongoing cost control with full-year cost out delivered above target, while "solid" operating cash flow performance was also a highlight.
Downer EDI swings to FY profit but misses estimates
The news: Engineering and services group Downer EDI swung to a full-year profit but missed average estimates, flagging a "challenging operating environment" during the 2024 financial year.
The numbers: Downer reported net profit after tax of $82.1 million, up from a loss of $385.7 million in FY23 but short of average forecasts of $187 million.
Total revenue lowered 5.2% year on year to $12 billion while EBITA jumped from a loss of $227.3 million in FY23 to $203.6 million. Its pro forma EBITA margin, excluding divestments, grew from 2.6% to 3.3%, including a second half margin of 4% compared to 3% in the prior corresponding period.
Downer declared a final dividend of 8 cents per share, up from 5 cents per share a year ago. The group said that it will continue to focus on enhancing the quality of revenue in FY25, reaffirming its EBITA margin target of more than 4.5%.
The context: Downer, which delivers essential services across the transport, utilities and facilities sectors in Australia and New Zealand, described it as a "pleasing result" in a "challenging operating environment" driven by macroeconomic uncertainty, labour shortages and persistent cost pressures.
It noted that its simplified operation model, implemented at the start of the financial year, helped the group establish a "clear focus on delivery" and "showed improvements in all key financial metrics".
What they said: "Downer's FY24 results emphasise the progress we are making in our turnaround and demonstrate the organisation's ability to deliver earnings and EBITA margin improvement in varied market conditions within our enhanced risk guardrails," Downer chair Mark Menhinnitt and CEO Peter Tompkins said in a joint comment.
"Our priorities for FY25 are to continue executing our transformation strategy, underpinned by a back to basics approach with a steadfast focus on project delivery, Zero Harm and risk management," they said.
The source: ASX announcement
