Downer EDI (DOW) H2 2024 earnings summary

Executive summary

• Achieved a significant FY24 turnaround with 34% growth in pro forma EBITA to AUD 384.1 million, statutory NPAT of AUD 82.1 million, and improved margins, driven by cost reductions, portfolio simplification, and enhanced risk governance.

• Delivered AUD 130 million in annualised gross cost out, surpassing the initial AUD 100 million target, with a clear path to AUD 175 million by FY25.

• Completed six non-core divestments, with three more in progress, and merged Utilities and Industrial/Energy segments.

• Enhanced governance with board renewal, new risk management frameworks, and improved project controls.

• Launched a high-performance culture program and refreshed leadership team.

Financial highlights

• Pro forma revenue increased 5.5% to AUD 11.7 billion; EBITA up 34% to AUD 384.1 million; EBITA margin rose to 3.3% for FY24 and 4% in 2H24.

• Statutory NPAT was AUD 82.1 million, reversing a prior year loss of AUD 385.7 million.

• Normalised cash conversion improved to 104% from 63% in FY23; operating cash flow up 71% to AUD 544.1 million.

• Total dividend of AUD 0.17 per share, up 30.8% year-over-year, with a 58% payout ratio.

• Work-in-hand increased 1% to AUD 38.5 billion, with about 90% government-related and high revenue security for FY25.

Outlook and guidance

• Management targets EBITA margin of over 4.5% (not formal guidance), with a minimum threshold of 4.2% in FY25 and average above 4.5% across FY25–FY26.

• Revenue expected to be flat in FY25, with focus on margin enhancement, cost discipline, and quality of earnings.

• FY25 priorities include delivering remaining cost out, enhancing project margins, maintaining risk discipline, and leveraging technology for productivity.

• Segment outlooks: Transport expects margin improvement; Utilities to benefit from business merger and cost out; Facilities outlook remains positive with margin drivers from divestments and cost out.