Downer (DOW) downgrades
Downer (DOW) -18.6%; the big service contractor was also whacked today after downgrading NPAT for the year. The company was forced to take a knife to expectations as a result of a number of loss making contracts in their Engineering, Construction and Maintenance division with net costs to complete these projects increased by $43m whilst also taking a restructure costs or $10m, and lowering revenue expectations for the division by $20m as a result of project delays. Still seems very hard to make money / not lose money in engineering.
The mining division wasn’t spared from the hits with a $12m cut to earnings in the second half as two projects had starts delayed. All this results in an $85m pre-tax hit to NPATA where guidance has been lowered to $300m for FY20, a 22% cut to prior expectations but an 18% miss to where the market was expecting. The company made a failed attempt at protecting the share price by announcing a small 5 year mining contract and increasing Work in Hand numbers at the same time, but the market saw straight through the ploy. Shares dumped to 12-month lows. BANG!
Downer (DOW) Chart
