Downer EDI shares rebound, new CEO under pressure to deliver

afr.com:

Downer EDI’s new management team is under pressure to deliver on revised earnings forecasts next month as investors become more confident about the company’s financial outlook, pushing its shares up 24 per cent over the past two months.

Downer’s stock has recovered from panic selling in late February when the company cut its annual profit guidance for the second time in two months and slashed its dividend, sending its shares 24 per cent lower in one session.

The shock announcement, which followed revelations of “accounting irregularities” in December, forced the exit of two directors, including chairman Mark Chellew, and the early departure of Downer’s chief financial officer, Michael Ferguson.

A few days later, NSW’s corruption watchdog revealed it was investigating several Downer employees for allegedly obtaining personal benefits while securing contracts for major transport projects.

New Downer CEO Peter Tompkins needs to deliver on the company’s earnings forecasts, analysts say. Michael Quelch

NSW’s Independent Commission Against Corruption, which detailed allegations of cash bribes, is still reviewing submissions related to the inquiry after hearings ended in May.

ICAC declined to comment on Tuesday on when it planned to release its report on the investigation. Downer’s shares have rebounded over the past two months, rising 24 per cent to close at $4.50 on Tuesday, their highest price since early December.

Superannuation fund Hostplus this month emerged as a substantial shareholder with a stake of just over 5 per cent.

Hostplus is understood to be a client of Downer’s two top shareholders, L1 Capital, which holds almost 12 per cent of the company’s stock, and Allan Gray, which holds about 9.1 per cent.

Downer was