Downer EDI to cut jobs as profit slides

Downer EDI said it may be forced to cut jobs after posting a four per cent decline in profit.

The company revealed its half-year net profit came in at $94.72 million, a 4.4 per decline on the previous period.

Revenue for the period was 8.8 per cent lower at $3.6 billion.

Downer’s CEO, Grant Fenn, said the company would meet its full-year guidance despite the difficult operating environment.

“Mining based construction and services markets remain subdued,” Fenn said.

 “Our mining related consultancy businesses were hit particularly hard and experienced financial losses.

“We continue to respond to the tough market conditions by working closely with our customers to drive productivity and reduce costs.” 

Downer Mining’s total revenue declined 20.4 per cent, reflecting the end of the contract at BHP Billiton's Daunia mine, early termination of the Goonyella mine contract and reduced volumes. 

The company said there were also fewer opportunities for the blasting business and discounted pricing of Ammonium Nitrate supply, which placed further pressure on earnings.

The company booked more than $11.6 million in redundancy costs for the first-half, and said more job cuts were to come as a company restructure gets underway.

“We anticipate there will be further redundancies in the second half as the businesses continue to right size and strive to improvement and efficiency and as a consequence of the broader group restructure,” CFO Kevin Fletcher said.

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