Infrastructure and engineering company Downer EDI has reaffirmed predictions of double-digit growth in profits for the current financial year.
Chief executive Geoff Knox told the company’s investor-day conference on Wednesday that demand remained strong for Downer EDI’s services.
He said in a presentation the company’s new order book was firm with $13.5 billion of work in hand, no material change to FY09 guidance, while the group has funded a significant portion of its debt obligations maturing in the 2010 financial year
"We see good demand for our services," Mr Knox said.
"It’s not happy times but it’s certainly not tragic times. We see good solid demand continuing."
"The steady full-year guidance of profit growth remains at the lower end of a 10% to 15% rise.
"We’re actually travelling reasonably well given the circumstances of the market," Mr Knox said.
Downer EDI posted net profit for 2007/08 of $165.8 million.
The company services the transport, energy, communications and resources sectors across Australia, New Zealand, Asia Pacific and United Kingdom.
Commodity prices and volumes were "OK" despite falls from their peak in the last financial year, he said.
Discretionary infrastructure spending had fallen but the main driver of Downer EDI’s business, non-discretionary infrastructure spending, remained strong, Mr Knox said in his presentation..
"It’s not easy out there but volumes are holding, and that’s great for us," he said.
Downer EDI shares were up 11c, or 2.34%, at $4.81.
Mr Knox said the synergies program is delivering value on its target of $47 million in savings.
"Initial focus is delivering benefits in property, shared services, IT and HR.
He said the "early benefits were being reinvested to support future gains. "15% of support staff have been cut, the group offices co-location in the Sydney Metropolitan area next financial year will result in a 25% reduction in floor space and a 25% reduction in average lease cost per square meter."
And the total cost of providing IT per user in Australia will be reduced by 15% next year.
In property the gains will come through reducing costs by lower lease expenditure, and with the co-location plans developed for the Sydney & Auckland metropolitan areas which have been finalised for the next financial year – other capital cities are in planning.
And BHP Billiton said yesterday that the settlements reached for most of its 2009 metallurgical coal contracts will see price falls of about 58% in the year started April 1, compared with the year that ended on March 31.
The company said yesterday that terms for a significant portion of its 2009 contracts have been agreed, following settlements with key global customers.
"Based on settlements to date, US dollar, prices for prime metallurgical coal products are expected to decrease by approximately 58 per cent from 2008 levels," it said in a statement to the ASX.
