Downer EDI investors have had horror week and it just took another turn
Nick Sundich, March 3, 2023
Downer EDI (ASX:DOW) has had among the worst weeks imaginable for an ASX company. The infrastructure company unveiled results that depicted a plunge in its profit and also confessed to the discovery of accounting errors. And heads have rolled over the result.
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Downer EDI’s week from hell
On Monday, Downer EDI released its 1HY23 results. The company cut its annual profit guidance for the second time in 2 months, slashed its dividend and its net profit fell 21% to $68.1m.
Downer EDI shares fell over 20% in one day and are down by over 36% since late November. The decline all began with the unveiling of accounting issues in December.
Even though the company clarified on Monday that this was only in relation to one contract and that there’d been no fraud, this did little to mitigate the drop.
Downer EDI (ASX:DOW) share price chart, log scale (Source: TradingView)
Heads have rolled
Pressure from major shareholders led to the departure of Chief Financial Officer (CFO) Michael Ferguson on Wednesday. Today, chairman Mark Chellew departed as well.
CEO Grant Fenn is likewise leaving the business today, although his departure was announced last December. He will be succeeded by long-term COO Peter Tompkins.
Adding insult to injury, the NSW ICAC announced it was investigating certain staff members for allegedly obtaining personal benefits while securing contractors for major transport projects.
Any silver linings?
One of the few positives of the horror week was that substantial shareholders have been increasing their stake in spite of their discontent.
Perhaps they are anticipating better governance and a better performance in the future. However, it will take some time to restore investor confidence in the company.
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