The Downer EDI Limited (ASX: DOW) share price has edged lower this morning despite the infrastructure company announcing $324 million in contract wins. Downer EDI's asset services business has been awarded a number of contracts in the power generation, oil and gas, and industrial sectors with a combined value of approximately $324 million.
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What does Downer EDI do?
Downer EDI designs, builds, and maintains assets, infrastructure, and facilities. The leading provider of integrated services in Australia and New Zealand, Downer EDI also owns 88% of Spotless Group Holdings. The company has a solid track record of delivering installation, maintenance, and shutdown services to customers across Australia.
What did Downer EDI announce?
Downer EDI announced the award of contracts across a number of markets. In the power generation market, Downer has been awarded contracts to deliver outages and supplementary labour to a power plant in NSW, install a stator at a plant in Victoria, and inspect and rewind generator rotors in Queensland.
In the oil and gas market, Downer was awarded a contract with Santos Ltd (ASX: STO) for multi-disciplinary works across a number of sites and an extension to a maintenance contract for a natural gas facility in Darwin. In the industrial market, the company has been awarded a contract with BHP Group Ltd (ASX: BHP) for capital projects at iron ore sites and a contract with Wesfarmers Ltd (ASX: WES) for electrical maintenance and shutdowns.
CEO Grant Fenn said "the contract wins demonstrate Downer's position as an industry leader in the delivery of major maintenance and specialist services to customers in the resources, energy, and industrial sectors". He also commented that "…Downer has an excellent track record of delivering installation, maintenance and shutdown services to our customers across Australia".
How has the Downer share price been performing?
The Downer share price fell a massive 69% between its January high and March low. By comparison the S&P/ASX 200 (ASX: XJO) fell 36.5% from its high in February to its low on 23 March. Although the Downer EDI share price has gained 55.6% from its low, it remains 52.2% below its high for the year. The ASX 200 is currently 16.1% below its high for the year. Despite the impacts of COVID-19, Downer EDI reports cash performance improved materially in the second half of the financial year. Underlying EBITDA of $410 – $420 million is forecast for FY20, with NPATA of $210 – $220 million.
