Downer Surges with 82% Profit Jump and $230M Share Buy-Back

Strong Financial Performance

Downer EDI Limited has delivered a standout financial performance for the fiscal year ended June 30, 2025, with statutory net profit after tax (NPAT) soaring 81.6% to $149.1 million. Underlying net profit after tax and amortisation (NPATA) also rose a robust 33% to $279.4 million, comfortably hitting the top end of the company’s guidance range. This growth was underpinned by a 24.5% increase in underlying EBITA to $474.2 million and a significant margin expansion to 4.4%, marking the highest full-year EBITA margin in more than a decade.

Operational Discipline and Cost Efficiency

CEO Peter Tompkins attributed the strong results to a disciplined operational focus and portfolio simplification efforts. The company exceeded its cost reduction target with cumulative annualised gross cost savings of $213 million, surpassing the $200 million goal. These efficiencies, combined with a near 98% normalised cash conversion rate, have strengthened Downer’s balance sheet, reducing net debt to EBITDA to a conservative 0.9x, well below the 1.5x target.

Capital Management and Shareholder Returns

Reflecting confidence in its financial position and future prospects, Downer announced an on-market share buy-back program of up to $230 million, representing approximately 5% of issued capital. This move complements a final fully franked dividend of 14.1 cents per share, bringing the full-year dividend to 24.9 cents per share; a 46.5% increase from the prior year. The company also raised its dividend payout target range to 60-70% of NPATA, signaling a commitment to enhanced shareholder returns.

Portfolio Simplification and Strategic Focus

Downer continued to streamline its operations by divesting several non-core businesses, including New Zealand Catering and Australian Cleaning, and is progressing with the sale of its 49% stake in Keolis Downer, pending regulatory approval. This portfolio simplification sharpens the company’s focus on core markets and growth areas aligned with its technical strengths, particularly in transport, energy, and facilities management sectors.

Outlook and Transformation Momentum

Looking ahead to FY26, Downer enters with positive momentum and a stable market outlook. While revenue is expected to be flat to slightly lower, the company targets further improvements in underlying earnings and EBITA margin. Investments in digitisation, AI, and modernised work practices are set to drive productivity and cost efficiencies in the next phase of its transformation. Growth opportunities remain strong in energy transition, defence, and infrastructure sectors across Australia and New Zealand.