Downer EDI says ‘challenging’ year ahead after $386m net loss

afr.com:

Downer EDI has warned market conditions remain “challenging” particularly over the next six months as the company sealed an annual net loss of $386 million.

Downer 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 and ongoing difficulties with some utilities projects.

The company has had a torrid seven months after first revealing “accounting irregularities” in December, and then cutting its annual profit guidance for the second time in two months and slashing its dividend at its first half results in February.

The profit warnings and subsequent share price tumbles forced the exit of two directors, including chairman Mark Chellew, and the early departure of Downer’s chief financial officer, Michael Ferguson. Downer has also been embroiled in a NSW corruption inquiry.

On Thursday, Downer said that fiscal 2024 would be a “transition year” as it tried to stabilise its business. “The external market conditions remain challenging for Downer in areas including ongoing cost escalation, labour availability and productivity issues, however we are observing signs of stabilisation,” the company said.

It cautioned that the “run off” of existing low margin contracts would impact performance in the first half of fiscal 2024, but it is targeting stronger earnings in the second half.

Downer reported a final dividend of 8¢ per share, down from 12¢ per share a year earlier.

It delivered underlying net profit after tax and amortisation of $174.2 million, within its last communicated guidance range, down 18.5 per cent on a year earlier.

The net loss was caused by a pre-tax, non-cash impairment charge of $549.6 million, mostly related to writing down goodwill