Key Highlights

• Downer's underlying EBITA reached $502.9 million in FY26, reflecting a 5.1% Margin and exceeding its management target.

• Statutory NPAT rose 51.2% to $225.4 million, with underlying NPATA increasing 9.8% to $306.7 million.

• Work-in-hand climbed 10% to $38.5 billion, with approximately 90% relating to government contracts.

Shares of Downer EDI Ltd (ASX:DOW), one of Australia's largest integrated services companies, traded at A$7.16 during the session on 05 November 2026, up 0.70%. The S&P/ASX 200 (XJO) gained 2.61%, adding 230.60 points to 9,065.10, while the S&P/ASX 200 Industrials index (XNJ) rose 2.21%, climbing 182.50 points to 8,422.80. Overnight Wall Street gains, following a decisive Democratic victory in the U.S. midterm elections, provided a positive backdrop for Equity markets globally. Downer operates across the transport, energy and utilities, and facilities management sectors, providing essential services to government and private sector clients in Australia and New Zealand.

FY26 Financial Performance

On 20 August 2026, Downer released its FY26 results for the twelve months ended 30 June 2026. Underlying EBITA of $502.9 million represented a 6.1% increase, with the EBITA margin expanding 70 basis points to 5.1%. This performance exceeded the company's previously established management target of an average margin above 4.5% across FY25 and FY26. Statutory NPAT surged 51.2% to $225.4 million, while underlying NPATA grew 9.8% to $306.7 million. Underlying Earnings Per Share rose 14.1% to 42.9 cents, and total dividends increased 17.3% to 29.2 cents per share, fully franked.

Segment Breakdown and Operational Highlights

Downer's Energy and Utilities division delivered a 20.0% uplift in pro forma EBITA to $140.9 million, with margins expanding 150 basis points to 5.7%. Growth in energy transition-related activities, including transmission line and substation projects, contributed to the improved performance. The Transport division saw pro forma EBITA increase 6.8% to $297.0 million, supported by progress on the Queensland Train Manufacturing Program (QTMP), which achieved milestones including Facility certification and commencement of rollingstock manufacturing. The Facilities segment recorded EBITA of $143.5 million at a 6.8% margin, with some impact from the transition of the Defence Base Services contract. Cash conversion reached 91.1%, exceeding the company's target of greater than 90%.

Work-in-Hand and Balance Sheet

Work-in-hand increased 10% to $38.5 billion, underpinned by $12.2 billion in new work secured during FY26. Notable contract wins included the Defence Property and Asset Services contract valued at approximately $3.05 billion, water contracts worth approximately $1.5 billion, and NZTA state highway maintenance contracts valued at approximately NZ$1.5 billion. The Balance Sheet benefited from improved gearing, with net Debt to EBITDA falling to 0.8x from 0.9x. Free Cash Flow reached $229 million.

About the Company

Downer EDI Limited is one of Australia and New Zealand's largest integrated services companies, employing around 30,000 people across its operations. The company provides services across transport infrastructure, energy and utilities, and facilities management to government and private sector clients. Its portfolio simplification program was substantially completed during FY26, with the sale of its interest in Keolis Downer and the disposal of its New Zealand cleaning business.

Sector Context

The industrials sector on the ASX experienced broad-based gains during the 05 November session. Companies with exposure to infrastructure spending, defence, and the energy transition have been beneficiaries of government policy settings that favour Investment in essential services. Downer's high proportion of government-related work, at approximately 90% of its work-in-hand, provides Revenue visibility in an environment where public infrastructure investment remains a priority.

Risks

Revenue declined 7.5% in FY26 on a statutory basis as the company prioritised margin improvement over Volume growth. The ramp-up of new contracts, particularly the Defence PAS contract, creates short-term margin pressure. Exposure to the New Zealand economy and foreign exchange movements presents additional risk, as does the execution of the QTMP program, which is transitioning from facility construction to rollingstock manufacturing.

Catalysts on Watch

For FY27, management is targeting revenue and earnings growth with EBITA margin improvement, albeit with a skew towards the second half. Key areas to monitor include the ramp-up of Defence and Water contracts, improvement in Australian Road Services volumes, and further progress on the QTMP. The company's FY30 management ambitions include a 4% to 5% revenue compound annual growth rate.

The Broader Picture

Downer's FY26 results reflected a Business that has undergone significant transformation, achieving its margin targets while building a $38.5 billion work-in-hand book. The company's focus on higher-quality revenue, cash-backed earnings, and disciplined Capital allocation has produced a different earnings profile compared to prior years. With FY27 guidance pointing to continued margin expansion and a return to growth in the second half, the company's positioning across energy transition, defence, and transport infrastructure remains central to its medium-term outlook.