Downer EDI Limited Analysis

Overview

Downer is a leading provider of services to customers in markets including transport services, technology and communications services, utilities services, engineering, construction and maintenance, mining and rail. Downer operates primarily in Australia and New Zealand but also in the Asia-Pacific region, South America and Southern Africa.

In March 2017 the company had signed an agreement to acquire the construction, infrastructure and project management businesses of Hawkins.

Performance

The following information was extracted from Downer EDI Limited's Annual Report, released on 21 August 2025:

Improved financial performance

Downer continued to deliver year-on-year improvements and achieve key targets.

We continued our focus on quality of earnings, achieving an underlying margin of 4.4% in FY25 – this exceeded the management target of at least 4.2% and was an improvement on 3.2% in FY24.

Underlying NPATA of $279.4 million was a 33% increase on FY24, and at the top end of our guidance range, while statutory NPAT increased 82% to $149.1 million. Pro forma EBITA of $458.7 million increased by 20% on FY24, driven by an uplift in performance in Energy & Utilities and Transport, and ongoing strong performance in Facilities.

EBITA and NPATA growth was backed by strong normalised cash conversion of 98% exceeding our >90% target. Downer’s balance sheet continued to strengthen, with net debt to EBITDA of 0.9x (down from 1.4x) providing considerable capital management flexibility.

Downer’s strategic focus remains on improving revenue quality, project delivery excellence, and a marketleading cost to serve. Pro forma revenue, adjusted for assets held for sale, reduced by 2.5% to $10.6 billion, primarily driven by the application of our enhanced risk guardrails, and selective tendering. Organic growth was observed in Power, Water and Rail. The run-off of underperforming contracts in Water and Power Maintenance was largely completed in FY25. Softness previously flagged in Australian Road Services and New Zealand markets continues, alongside the adoption of strengthened risk guardrails in Hawkins and Industrial & Energy.