Downer EDI Limited Reports Strong FY24 Results Amid Strategic Reshaping

Highlights:

• Significant Earnings Growth: Downer EDI Ltd (ASX: DOW) reported a 34% increase in pro forma EBITA to AU$384.1 million, driven by a 5.5% rise in revenue to AU$11.7 billion and successful cost-out initiatives.
• Improved Profitability: The company's EBITA margin improved by 0.7 percentage points to 3.3%, with key sectors such as Transport and Utilities showing strong performance despite challenging market conditions.
• Debt Reduction and Strong Cash Flow: Downer achieved a net debt reduction to 1.4x EBITDA and a 104% normalised cash conversion, reflecting robust financial management and a focus on strengthening its balance sheet.

Building Momentum with Diversified Exposure

Downer EDI Limited (ASX: DOW) has unveiled robust financial results for FY24, showcasing the success of its strategic reshaping and cost reduction initiatives. The company reported a 34.1% increase in pro forma EBITA to AU$ 384.1 million, with a 0.7 percentage point improvement in EBITA margin to 3.3%. Statutory NPAT surged to AU$ 82.1 million, a significant recovery from a loss of AU$ 385.7 million in FY23. The company’s FY24 total dividend increased by 30.8% to 17.0 cents per share.

Key Sector Performance and Strategic Moves

Downer’s diverse portfolio, spanning transport, utilities, and facilities, demonstrated resilience and growth. The transport segment saw a 7.8% increase in revenue to AU$ 6.0 billion, driven by the Queensland Traffic Management Program (QTMP) ramp-up, despite lower spending by transport agencies in Australia and New Zealand. The utilities sector reported a remarkable turnaround, with EBITA soaring by over 100% to AU$ 54.5 million, buoyed by new contracts, including a AU$ 600 million Unitywater contract.

The facilities segment, despite a slight dip in revenue, achieved a 3.3% increase in EBITA, driven by strong performance in government health and education projects. Noteworthy contract wins, such as a AU$ 860 million Homes NSW contract and the Woomera Defence Base Redevelopment Project, further solidified Downer’s market leadership.

Reshaping for Future Growth

Downer’s strategic initiatives, including the divestment of non-core businesses and the merging of its utilities and industrial energy sectors, have positioned the company for sustained growth. The company’s focus on reducing debt, enhancing governance, and optimizing capital allocation reflects its commitment to long-term value creation. With a AU$ 38.5 billion work-in-hand portfolio and a healthy forward pipeline, Downer is well-positioned to capitalize on key tailwinds in FY25 and beyond.

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