Downer EDI reports sales flat in first half

DOWNER EDI’s New Zealand business reported flat firsthalf sales as gains from its Hawkins construction and utilities businesses made up for weaker sales from transport infrastructure.

Sydneybased Downer’s revenue from the New Zealand and the Pacific Islands was largely unchanged at $A1.21 billion ($NZ1.27 billion) in the six months ended December 31, lagging behind a groupwide gain of 8.6% to generate sales of A$6.6 billion.

The New Zealand transport division, which spans road and rail construction and maintenance, reported an 8.6% fall in revenue to $A499.7 million and noted weaker performance from local transport infrastructure as weighing on earnings.

The company still sees good prospects for transport infrastructure on both sides of the Tasman, but said the cost of bidding can be high and project risk can be significant.

The Kiwi utilities business, covering electricity, water, gas and telecommunication infrastructure, posted an 8.5% increase in revenue to $A229.9 million, while its facilities unit, which includes the Hawkins construction company, lifted revenue 6.6% to $A477.2 million.

Downer bought Hawkins in 2017 for $A55.4 million, expanding its presence in New Zealand and gaining capability in ‘‘vertical’’ construction, a segment in which many local firms have struggled to maintain profitability over the past year.

The company said there was a big pipeline of work for power and gas utilities here and in Australia. Large telecoms projects were ending but rising data usage would still drive demand.

Group net profit of $A141.4 million compared to a loss of $A15.9 million a year earlier, and the company increased its annual earnings guidance to $A352 million from an earlier forecast of $A335 million. Underlying earnings rose 24% to $A163.4 million in the six months ended December 31.

Downer’s board declared an interim dividend of $A 14 cents per share, up from $A 13 cents a year earlier. It will be paid on March 21 with a record date of February 21.

The ASXlisted shares fell 3.6% to A$7.285, and have gained 7.5% so far this year.