Engineering and construction group Downer EDI (DOW) has lifted interim dividend by one cent a share to 11 cents for the December half year, despite reporting a slide in earnings and warning that the outlook for the mining sector remains challenging (as Macmahon Holdings also warned).
Downer said yesterday that first half net profit fell 4.4% to $94.7 million as group revenues slid 8.8% to $3.6 billion in the six months to December.
Earnings before interest and taxation (EBIT) slumped 30% in Downer’s mining division to $63.4 million as contracts ended early, while EBIT in the group’s infrastructure division fell 17% to $72.8 million as demand for mining-related capital works dropped.
But EBIT in the company’s struggling rail division, long the millstone around Downer’s profit and loss account, jumped by 279% to $17.5 million.
As a result, group EBIT fell 11.5% to $141.7 million.
DOW 1Y – Downer profit slips 4.4%
But Downer chief executive Grant Fenn is confident the company remained “on track” to meet its full year earnings guidance by improving productivity and cutting costs.
“Mining based construction and services markets remained subdued,” Mr Fenn said in a statement.
"Our mining related consultancy businesses were hit particularly hard and experienced financial losses."
Downer’s lower interim was inline with market forecasts, but the shares fell 0.8% to $4.45.
