Downer EDI Ltd (ASX: DOW) shares are ending the week with a bang.
In morning trade, the ASX 200 stock is up over 17% to $5.61.
This follows the release of the integrated services provider's full year results.
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ASX 200 stock rockets on results day
- Revenue up 5.5% to $11,743.4 million
- Pro forma EBITA up 34.1% to $384.1 million
- Underlying net profit after tax before amortisation (NPATA) up 20.6% to $210.1 million
- Underlying NPAT up 24.5% to $193.9 million
- Total dividends up 30.8% to 17 cents per share
What happened in FY 2024?
For the 12 months ended 30 June, Downer reported a 5.5% increase in revenue to $11,743.4 million.
This reflects a 7.8% increase in Transport revenue to $6 billion and a 6.5% lift in Utilities revenue to $2.4 billion, which offset a 0.7% decline in Facilities revenue to $3.2 billion.
Things were even better for the ASX 200 stock's earnings thanks to a 0.7 percentage points increase in its EBITA margin to 3.3%. This led to Downer reporting an impressive 34.1% increase in pro forma EBITA to $384.1 million. The good news is that its EBITA margin lifted to 4% in the second half, which bodes well for its earnings in FY 2025. This reflects $130 million in annualised gross cost-outs, surpassing its initial target of $100 million.
On the bottom line, the company's NPATA lifted by 20.6% to $210.1 million in FY 2024.
This allowed the Downer board to declare a 50% franked final dividend of 11 cents per share, which brought its full year dividend to 17 cents per share. This represents an increase of 30.8% year on year.
Broker reaction
Goldman Sachs has been looking over the result and appeared to be relatively impressed with what it saw. The broker described the result as "better than expected".
It notes that "Underlying NPAT of A$194m was +4/+4% vs GSe/VAc."
Management commentary
The ASX 200 stock's CEO, Peter Tompkins, was pleased with the company's significantly improved performance. He said:
Over the past 18 months, we have refreshed our leadership team and made significant changes to our operating model and organisational structure, to redefine roles, authorities, and accountability for performance. We are making good progress in our business turnaround, delivering a cash-backed result alongside double digit underlying and pro forma EBITA and NPATA growth, whilst focusing on reducing the risk profile of our portfolio and strengthening our balance sheet.
The result demonstrates our ability to deliver earnings and EBITA margin improvement in varied market conditions within our enhanced risk guardrails. It also highlights the resilience of our diversified and high quality portfolio, the benefits of scale and our capacity to achieve operating and cost efficiencies.
Outlook
No firm guidance was provided for FY 2025. But the ASX 200 stock stated the following:
We are building momentum and growing confidence as we enter FY25. We will continue to focus on enhancing the quality of revenue and targeting continued improvement in EBITA margin towards our management target of more than 4.5%.
