Downer EDI lifts H1 profit

Group expects to meet FY profit target, H1 revenue declines.

Engineering group Downer EDI (DOW) says it is on track to meet its full-year forecast for net profit of $215 million, after posting a slight uptick in first-half profit.

In the six months to December 31, Downer posted a profit, after significant items, of $99.11 million, a 5.4% increase on the 94.04 million in the first half of previous fiscal year.

In the same period revenue was $3.76 billion, a 17% decline on the $4.53 billion in the previous corresponding period.

Earnings before interest and tax (EBIT) reduced by 5.4% to $160.1 million, from $169.3 million.

The company attributed the profit result to improved productivity and cost cutting.

"Despite the decline in total revenue and EBIT, the focus on cost reduction, productivity and capital management has delivered an improved net profit after tax (NPAT) result," Downer EDI said.

Operating cash flow was up 54.9% to $280.3 million.

At December 31, Downer’s gearing was 8.2% with available liquidity of one billion dollars comprising cash of $364 million and undrawn committed facilities of $647 million.

The group will pay an interim dividend of 11 cents, of which 7.7 cents will be franked.

Earnings from the rail division were down more than 86 per cent due to the near-completion of its Waratah Train Project.

Meanwhile, earnings were down almost 15% from the company's infrastructure division and just over seven per cent from its mining division, owing to the completion of several projects.

Downer EDI said fiscal 2014 had, as expected, been characterised by a reduction in new major capital works in the resources sector, as well as a greater emphasis by mining customers on optimising volumes and cost of production.

"As a result, 2014 has so far been a year of consolidation rather than growth and this is expected to continue through the full year," the group said.

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