AusRAIL, Market Sectors

Downer reports strong results but tough year ahead

<span class="" id="parent-fieldname-description"> Downer EDI has reported a year to June net profit of $203.98m and revenue growth for all of its businesses including rail, but predicts a higher level of uncertainty in revenue for 2014. </span> <p>Releasing its full-year accounts yesterday, Downer’s June net profit for the 2013 financial year was up $107.51m from the previous year with the company reporting an underlying net profit tax of $215.4m – an increase of 10.3%.</p><p>Underlying earnings before interest and tax (EBIT) increased by 6.9% to $370.3m. </p><p>All of Downer’s businesses recorded revenue growth with Downer Rail up 4% to $1.3bn, Downer Infrastructure up 13.1% to $5.2m and Downer Mining up 3.7% to $2.6bn.</p><p>However, Downer Rail’s EBIT dropped 22.7% to $59m largely due to the decrease in demand for freight locomotives and the company’s transition out of locomotive manufacturing.</p><p>Downer announced in July last year that all locomotives for the Australian market would be manufactured by the company’s partner, EMD, at a ‘low cost’ overseas facility.</p><p>“Downer Rail is undergoing significant transformational change as it transitions&nbsp from being a manufacturer to a whole-of-life asset manager of rolling stock,” Downer chief executive Grant Fenn said yesterday. </p><p>The company reported that during the past year the Waratah Train project has continued to make considerable progress against program milestones including schedules and costs.</p><p>While Downer previously made a $440m provision to be able to complete the project, since December 2012, 24 trains have been presented to RailCorp and as of August 6 this year 47 trains are now in passenger service.</p><p>The 78th train is on schedule to be delivered mid-2014.</p><p>Fenn said the company’s results were a great outcome given the current environment.</p><p>’We are one of the few companies in the sector to deliver on guidance,” he said.</p><p>However, Downer warned that 2014 would be characterised by budgetary pressure on the level of government expenditure on rail and road maintenance, a weaker outlook for the mining sector and a subsequent reduction in new major capital works in the resources sector.</p><p>“As a result, there is a higher level of uncertainty in revenue of the 2014 financial year than in the prior year,” the company said.<br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br />&nbsp</p>