Downer EDI H1 net profit edged up on margin growth

Downer EDI (ASX:DOW) announced a robust financial performance for the first half of the 2026 fiscal year, marked by significant margin expansion and solid growth in its bottom line.

For the six months ended Dec. 31, 2025, the company achieved a statutory net profit after tax of $98 million, representing a sharp 29.8% increase compared to the previous year.

The primary driver of this performance was the company’s focus on "portfolio simplification" and cost discipline.

Downer reported an underlying EBITA margin of 4.6%, a 90-basis point improvement that surpassed its management target of >4.5%.

While total statutory revenue saw a slight dip of 6.9% to $4.86 billion—largely due to strategic divestments—the underlying profitability remained resilient.

Underlying NPATA rose by 7% to $136.1 million, while underlying EBITA climbed 11.2% to $227.1 million.

CEO Peter Tompkins attributed the results to a "disciplined approach to prioritising revenue quality."

The company's balance sheet also saw marked improvement; net debt to EBITDA reduced to 0.8x, bolstered by $68.7 million in proceeds from the sale of its interest in Keolis Downer.

Shareholders are set to benefit from this growth, with the interim dividend increasing by 19.4% to 12.9 cents per share, now 100% franked.

Despite a minor decrease in cash conversion to 90.5%, Downer maintains a strong outlook based on increased work-in-hand and predictable earnings.

At the time of reporting, Downer EDI's share price was $8.04.