Downer lands $800m in road maintenance contracts

Downer (ASX: DOW) was up 1.01% at the open following revelations that the provider of integrated services in Australia and NZ has been awarded two road maintenance contracts by Auckland Transport, valued at around $800m over a maximum term of 10 years.

Commencing 1 July, the contracts are for initial five-year terms plus five-year extension options.

Downer will act as stewards of Auckland Transport’s Central network and North Rural network, delivering maintenance and renewal activities and emergency repairs.

Commenting on today’s announcement, CEO of Downer NZ, Steve Killeen notes Downer is no stranger to Auckland Transport having maintained roads in region for more than 30 years.

Recent wins

Today’s announcement follows recently inked NZ contract wins, including an Electrical Field Services Agreement with energy provider Powerco, worth approximately $360m over a maximum term of five years, and a $100m contract with Transpower.

Closer to home, late April the company was awarded a $30m contract from the Department of Defence to plan the proposed Riverina Redevelopment Program.

Once completed, a $1.1bn delivery phase may follow, subject to government and parliamentary approvals.

Interim

Down -12.35% over one year, the share price fell -7% early February after the company posted a mixed-bag first half result.

Total revenue of $6bn was down -2.3%, while statutory earnings (EBITA) of $186.2m were down -4.9% due to the loss of contributions from the Mining and Laundries divestments made in the current and prior periods.

However, after removing the amortisation component of Downer’s earnings, statutory earnings (EBIT) were up 5.9%.

The company also managed to decreased gearing from 19% to 16.5% due to strong operating cash flows and proceeds from the divestment program.

Downer EDI share price over 12 months.