Downer EDI Delivers 33% NPATA Surge and $230m Buy-Back Amid Strategic Reset

Robust Financial Performance Amid Portfolio Simplification

Downer EDI Limited has reported a strong set of results for the fiscal year ended June 30, 2025, demonstrating significant progress in its ongoing turnaround and transformation efforts. The company’s underlying net profit after tax attributable (NPATA) surged by 33% to $279.4 million, while underlying earnings before interest, tax and amortisation (EBITA) rose 25% to $474.2 million, delivering a 7.3% EBITA margin that exceeded management’s minimum target.

This performance was underpinned by disciplined project delivery, cost reductions, and a strategic focus on portfolio simplification, which saw the exit of lower-margin and non-core businesses. The company’s free cash flow improved to $324 million, with an impressive 98% cash conversion rate, reflecting strong cash-backed earnings and capital discipline.

Strategic Divestments and Capital Management

Downer continued to reshape its portfolio, finalising divestments including the sale of a 49% interest in Keolis Downer, with completion expected in late 2025 pending regulatory approvals. Other exits included cleaning and catering businesses in Australia and New Zealand, contributing to a more focused and capital-light operating model.

In a clear signal of confidence in its financial strength and outlook, Downer announced an on-market share buy-back program of up to $230 million, representing approximately 5% of issued capital. The company also increased its dividend payout ratio to 65%, with a fully franked final dividend of 14.1 cents per share, targeting fully franked dividends in FY26.

Segment Highlights and Growth Opportunities

The Transport segment, accounting for over half of revenue, delivered a 16% increase in EBITA to $290.7 million, supported by improved contract delivery and overhead cost reductions. Key projects such as the Queensland Train Manufacturing Program and Auckland City Rail Link progressed well despite some weather impacts.

Energy & Utilities saw a 42% EBITA uplift to $121.7 million, driven by turnaround momentum in power and water projects, alongside new contract wins including a $600 million electricity field services contract in New Zealand. Facilities management maintained steady performance with a $150.7 million EBITA, benefiting from cost discipline and portfolio optimisation.

Transformation and Future Outlook

Downer’s transformation program has achieved cumulative annualised gross cost savings of $213 million, exceeding its FY25 target. The company is investing in operational modernisation, including digitisation and AI adoption, to enhance productivity and customer experience.

Looking ahead to FY26, Downer expects stable market conditions with subdued Australian Transport Agency spending in the short term but remains optimistic about medium-term growth driven by New Zealand infrastructure programs, energy transition, defence spending, and population growth. The company targets an average EBITA margin above 4.5% across FY25 and FY26, with underlying earnings and margin improvements anticipated despite flat to slightly lower revenue.