Downer EDI Delivers Solid Half-Year Growth Amid Dividend Plan Suspension
Downer EDI reports a robust half-year financial performance for December 2024, with notable increases in profit and earnings per share, despite suspending its Dividend Reinvestment Plan.
- Underlying EBITA up 35.7% to $204.3 million
- NPATA rises 67.1% to $127.2 million
- Basic earnings per share increase 5.1% to 10.3 cents
- Interim dividend declared at 10.8 cents per share
- Dividend Reinvestment Plan suspended for this period
Strong Underlying Earnings Growth
Downer EDI has reported a solid financial performance for the half-year ended 31 December 2024, showcasing resilience in a challenging infrastructure sector. The company’s underlying earnings before interest, tax, and amortisation of acquired intangible assets (EBITA) surged 35.7% to $204.3 million, a significant improvement over the prior corresponding period. This uplift reflects operational efficiencies and steady demand across its construction and infrastructure services.
Profit from ordinary activities after tax and before amortisation (NPATA) also saw a remarkable 67.1% increase to $127.2 million, underscoring the company’s ability to convert revenue growth into bottom-line gains. Basic earnings per share rose 5.1% to 10.3 cents, signaling enhanced shareholder value despite broader market uncertainties.
Revenue and Dividend Highlights
Total revenue including joint ventures and other income declined by 6.5% to $5.5 billion, influenced by a lower contribution from joint ventures and other income streams. Nevertheless, the company maintained profitability, with reported EBIT increasing 4.5% to $133.4 million.
Downer declared an interim dividend of 10.8 cents per share, reflecting confidence in its cash flow generation and financial position. The dividend is partially franked, with 8.1 cents per share franked and the unfranked portion classified as conduit foreign income. The dividend record and payment dates are set for 27 February and 27 March 2025, respectively.
Dividend Reinvestment Plan Suspension
Notably, Downer has suspended its Dividend Reinvestment Plan (DRP) for this interim period. While the company did not provide detailed reasoning in this announcement, the suspension may reflect a cautious approach to capital management amid evolving market conditions. Investors will be watching closely for any further commentary or changes in capital allocation strategy in upcoming reports.
Looking Ahead
Downer’s results suggest a company navigating the complexities of the infrastructure sector with operational discipline and strategic focus. The strong underlying earnings growth provides a solid foundation, but the suspension of the DRP introduces an element of uncertainty regarding shareholder returns. Market participants will be keen to see how Downer balances growth opportunities with capital management in the second half of the fiscal year.
Bottom Line?
Downer EDI’s robust earnings growth is tempered by a cautious capital approach, setting the stage for a closely watched second half.
Questions in the middle?
- What are the strategic reasons behind suspending the Dividend Reinvestment Plan?
- How will Downer’s joint ventures perform in the coming quarters given the revenue decline?
- What impact will the current market conditions have on Downer’s project pipeline and margins?
