Downer EDI boss pledges ‘first-grade’ governance after $386m loss
Downer EDI chief executive Peter Tompkins has pledged to deliver consistent earnings and monitor project performance more carefully after the contractor hired a new chief risk officer and sealed an annual net loss of $386 million.
“We want to make sure that we’ve got first-grade governance across our entire portfolio of projects,” Mr Tompkins told The Australian Financial Review.
Downer’s shares slid 6 per cent to trade at $4.10 per share on Thursday afternoon after the company delivered a $10 million loss in its utilities division, compared with a $60 million profit a year earlier, and warned it would take time to turn around the troubled business.
Downer EDI boss Peter Tompkins needs to deliver sustained earnings and good cash flow, investors say. Edwina Pickles
Shareholders were prepared for bad news after the company told investors last week that it would finish 2022-23 in the red and that it is facing a more competitive market for defence projects.
Allan Gray analyst Tim Hillier said Downer’s new management team appears to be focused “on many of the right things”.
“But the proof is in the numbers – what investors really want to see is a sustained period of good earnings and cash flows,” Mr Hillier said.
“Mostly, they need to avoid making big mistakes, like chasing the wrong contracts, or making bad acquisitions or disposals.”
Allan Gray, which holds about 9 per cent of Downer’s stock, is the company’s second-biggest investor after L1 Capital, which owns 13 per cent.
Downer, which did not give specific profits guidance for the current financial year, has had a torrid seven months. It revealed “accounting irregularities” in December and slashed its earnings guidance, and then cut full-year guidance again at its
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