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Highlights

  • Underlying EBITA rises 11.2% to AUD 227.1 million, lifting NPATA to AUD 136.1 million.
  • Work-in-hand grows 8.9% to AUD 38.2 billion, supporting future revenue potential.
  • Portfolio simplification completed with divestments generating AUD 96 million in proceeds.

Downer EDI Limited (NZX:DOW) reported strong financial results for the six months ended 31 December 2025 (1H26), reflecting growth in profitability despite a modest decline in revenue. The company posted a 29.8% increase in statutory NPAT to AUD 98 million, with underlying NPATA rising 7.0% to AUD 136.1 million, driven by improved EBITA margins and disciplined cost management.

Revenue and Profitability Trends

Underlying EBITA increased 11.2% to AUD 227.1 million, with the group delivering an EBITA margin of 4.6%, exceeding management’s target of >4.5%. Earnings per share rose 10% to 18.7 cents, supported by strong cash conversion of 90.5%. Net debt to EBITDA improved to 0.8x, aided by proceeds of AUD 68.7 million from the sale of the 49% interest in Keolis Downer and AUD 27.3 million from dividends.

Revenue declined slightly during the period, with 1H26 underlying revenue down 3.6% on the prior period and pro forma revenue, adjusted for divestments and significant items, falling 4.9%. Statutory revenue decreased 6.9%. Despite this, work-in-hand grew 8.9% to AUD 38.2 billion, highlighting ongoing project wins across energy, water, defence, and transport sectors.

Portfolio Simplification and Strategic Focus

Downer completed its portfolio simplification program with the divestment of non-core businesses, including the New Zealand Cleaning business. These steps sharpened focus on core markets aligned with technical strengths, enhancing contract quality and risk management. Managing Director Peter Tompkins noted that the results reflect improved balance sheet strength, higher predictability of earnings, and ongoing margin expansion initiatives.

Segment Performance

  • Transport: Pro forma revenue declined 4.0%, influenced by reduced activity in Australian Road Services, a risk reset in Hawkins, and lower work volumes as key projects neared completion.
  • Energy & Utilities: Power Projects saw strong growth, with Energy & Industrial maintaining solid activity. Some revenue impacts came from the consolidation of telecommunications providers and lower NBN volumes. Water sector performance is expected to improve as new work ramps up.

Safety and Risk Management

Downer continues to prioritise safety across high-risk operations. The Lost Time Injury Frequency Rate (LTIFR) slightly increased to 0.87, and the Total Recordable Injury Frequency Rate (TRIFR) rose to 2.26. The company acknowledged a workplace fatality in New Zealand in January 2026 and extended condolences to affected families.

Outlook

For FY26, Downer expects:

  • Slightly lower revenue than FY25 pro forma revenue.
  • Continued EBITA margin improvement.
  • NPATA of AUD 295–315 million, assuming stable economic conditions and no major disruptions.

The group remains focused on building a high-quality order book, maintaining disciplined risk management, and leveraging operational efficiency to support sustainable growth.

FAQs

  1. Why did Downer’s revenue decline despite higher profits?
    Revenue was impacted by divestments, reduced activity in certain transport projects, and timing of new work, while margin improvements drove profit growth.
  2. What were the key operating highlights for 1H26?
    Underlying EBITA increased 11.2% to AUD 227.1 million, NPATA rose to AUD 136.1 million, and work-in-hand grew 8.9% to AUD 38.2 billion.
  3. Did Downer make any strategic changes during the period?
    Yes, the company completed portfolio simplification, divesting non-core businesses and focusing on core markets aligned with technical strengths.