Downer shares sink to four-month low
Downer EDI's shares hit a more than four-month low after it flagged a goodwill impairment charge of $77 million on its mining operations due to the loss of two material contracts and delays in securing alternative business.
Downer shares fell to $6.50 on Monday - its biggest drop since September 26 -before regaining some ground to close down 26 cents, or 3.8 per cent to $6.62.
The heavy engineering company on Monday said that its mining business' historic high levels of returns had declined "significantly" after it failed to renew two contracts.
But despite the troubles, Downer said it is hopeful for the segment's outlook.
"Downer remains positive in relation to mining's prospects, however the estimated future cash flows for the mining business do not support the carrying value of the previously acquired goodwill," the company said in a statement.
The expected first-half one-off pre-tax charge will have no impact on cash flow or existing operations, nor will it change the company's underlying guidance for the 2018 financial year.
Last year, India's Adani group cancelled contracts awarded to Downer for its controversial Carmichael coal mine after deciding to develop the project on its own.
Downer said it had mutually agreed with Adani to end all contracts awarded to it since 2014, when it received a $2 billion contract to provide technical services including drilling, blasting and coal and waste haulage for the mine.
Downer on Monday said it is targeting net profit after tax and before amortisation of $295 million - including $202 million for Downer and $93 million for Spotless, of which it owns 87.8 per cent following a lengthy takeover struggle.
Back to Breaking News