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Downer swings to $134m first-half profit

AAP  |  07 Feb 2019Text size  Decrease  Increase  |  
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Downer EDI has swung to a $134.2 million first-half profit, helped by continued revenue from construction of the NBN.

The engineering company, which posted an $11.1 million first-half loss this time last year, was boosted by a 27.5 per cent increase in revenue from the utilities business that includes NBN contracts and new renewable energy projects.

Total revenue rose 8.6 per cent to $6.6 billion for the six months to 31 December.

Announcing the positive performance on Thursday, Downer (ASX: DOW) raised its full-year guidance for net profit after tax and amortisation (NAPTA) to $352 million from $335 million.

The improved guidance came a day after the company secured a $900 million order from the NSW government for 17 Waratah Series 2 trains.

Increased activities on the Ichthys' gas field project in the Northern Territory helped lift first-half construction and maintenance revenue 34.1 per cent to $945.1 million.

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Increased activities at Blackwater and Carrapateena mines also contributed to the improved performance.

Downer lifted its interim dividend one cent to 14 cents, half franked.

At 1.40pm Sydney time, Downer shares were down 30 cents, or 3.97 per cent, at $7.26.

Morningstar analyst Mark Taylor has made no change to his $5.70 fair value estimate for Downer. This is despite lowering underlying fiscal 2019 EPS forecast by 6 per cent to 48 cents from 51 cents. 

"Our fiscal 2019 forecast is in line with the upgraded guidance," Taylor said. "We were previously above guidance, anticipating better margin improvement on increased road construction and surfacing from state government investment, growth in renewable energy projects, strong growth in minerals processing, and growth in oil and gas maintenance. This didn't eventuate to the degree anticipated."

Downer's first-half profit:

  • Net profit $134.2m vs $11.1m loss in pcp
  • Revenue up 8.6pc to $6.6bn
  • Interim dividend up 1c to 14c, 50pc franked



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