Highlights

  • FY26 Revenue declined while underlying EBITA, NPATA and statutory profit increased.
  • Work in hand reached A$38.5 billion, supported by defence, water, renewables and infrastructure awards.
  • Transport and Energy & Utilities improved Earnings despite lower segment revenue.
  • Management expects FY27 performance to be weighted more heavily toward the second half.
  • The company continues to focus on Margin improvement, contract execution and Capital discipline.

Downer EDI (ASX:DOW) provides integrated services across Australia and New Zealand, delivering and maintaining essential infrastructure for communities. Its FY26 result highlighted a shift toward higher-margin work, a larger contracted workload and a simplified portfolio, while management also indicated that FY27 earnings are expected to be more heavily weighted toward the second half.

FY26 Earnings Improved Despite Lower Revenue

For the year to 30 June 2026, revenue fell 7.5% to A$9.74 billion. Underlying EBITA increased 6.1% to A$502.9 million, lifting the EBITA margin to 5.1%. NPATA rose 9.8% to A$306.7 million, while statutory net profit after tax increased 51.2% to A$225.4 million. Cash conversion was 91.1%, above the company’s target, and the fully Franked Dividend increased to 29.2 cents per share.

Record Work in Hand Supports Revenue Visibility

Work in hand reached A$38.5 billion at 30 June 2026, up 10% and representing a record level for the group. Around 90% of the contracted workload relates to government customers. During 2026, Downer secured major work across defence, water, energy, transport and facilities management, including more than A$900 million of energy and utilities contract renewals, extensions and new agreements across Australia and New Zealand.

Segment Performance Reflects Margin Focus

Transport revenue declined 3.3% to A$5.2 billion, while EBITA rose 6.8% to A$297.0 million and the segment margin reached 5.7%. Energy and Utilities revenue decreased 10.9% to A$2.5 billion, but EBITA increased 20% to A$140.9 million, also producing a 5.7% margin. Facilities revenue slipped 1.8% to A$2.1 billion, while EBITA declined 4.8% to A$143.5 million as the Defence Base Services contract transitioned into a new arrangement.

FY27 Expected to Be More Second-Half Weighted

Management is targeting further revenue growth, earnings growth and margin improvement in FY27. However, the first half is expected to record lower revenue, earnings and EBITA margin than the prior corresponding period, with growth anticipated to return in the second half. Key variables include the timing of power and social housing projects, the ramp-up of water and defence work, Australian road services volumes and changes in rail activity.

Balance Sheet and Capital Management

Net Debt to EBITDA was 0.8 times at 30 June 2026, and available Liquidity was about A$1.8 billion. Downer issued an A$400 million seven-year note in April 2026. The group is also continuing an on-market share buy-back, with A$96.5 million repurchased by 30 June 2026. These measures sit alongside ongoing Investment in contract delivery and the company’s FY27-FY29 strategic focus on sustainable growth.

Key Insights

Downer’s FY26 result showed that earnings and margins can improve even when revenue declines, provided the contract mix and operating discipline improve. The record A$38.5 billion work-in-hand position provides visibility, but FY27 execution will depend on the timing and ramp-up of major projects. The company’s balance sheet, cash conversion and government-linked contract base remain central measures for assessing progress through the next reporting period.