Downer back to profit as NZ group earnings more than double

BUSINESSDESK: Downer EDI, the infrastructure, mining and rail building firm, more than doubled earnings in New Zealand this year and returned to profit as a group after write-downs on its New South Wales train project erased earnings in 2011.

The New Zealand unit's pretax earnings climbed to $A29.6 million in the 12 months ended June 30, from $A11 million a year earlier, with local revenue rising to $A919.6 million from $A879.2 million, the Sydney-based company says.

The group reported a net profit of $A112.8 million, or 23.5 Australian cents per share, from a loss of $A27.8 million, or 10.5 cents per share, a year earlier.

"The efficiency improvements that have been introduced over the past two years are now starting to show up in the New Zealand results," the company says.

"New Zealand continues to experience difficult economic conditions, compounded by ongoing seismic activity around Christchurch."

Downer was forced to raise funds after deferred government spending on infrastructure projects were compounded by problems with successive write-downs of some $A440 million on the NSW Warratah project.

The board didn't declare a dividend in the year, though it expects earnings to rise to $A210 million in the 2013 financial year, with pretax profit of about $A370 million.

"There is, at the current time, an increasing level of uncertainty around the level and timing of government and private-sector investment in infrastructure in both Australia and New Zealand," the company says.

"That said, Downer is well-positioned in terms of the percentage of work already secured that will impact on the year ahead."

The company's Australian infrastructure business increased pretax earnings 38% to $A150.7 million, with a 14% lift in revenue to $A3.7 billion.

"There is a significant pipeline of opportunities for Downer Infrastructure in both Australia and New Zealand," the company says. "The newly integrated business is already seeing the benefits of scale, increased management depth and technical expertise."

The mining business boosted sales 68% to $A2.5 billion for a 45% increase in earnings before interest and tax to $A173.5 million, while the rail business' revenue improved by 14% to $A1.3 billion with ebit up 1.8% to $A76.4 million.

Downer's $150 million of bonds listed on the NZX's debt market mature next month and will be repaid from the remaining proceeds of the company's $A147 million sale of CPG Asia and existing bank facilities, it says.

The shares rose 0.7% to $A3.12 on the ASX on Friday.