Downer shares jump as guidance reiterated

Downer EDI shares jumped more than five per cent after the engineering firm said it was on track to meet its profit guidance expectations.

Chief executive Grant Fenn told the company's annual general meeting in Sydney on Wednesday that the company had performed to plan in the first three months of the 2012/13 financial year, leading Downer to reiterate its profit guidance.

"Consequently, at this point, despite future market uncertainties, we maintain our guidance for the full-year result of earnings before interest and tax of $370 million and net profit after tax of $210 million."

The company reported a net profit of $113 million for the year to June 30.

Downer's net debt for the 2011/12 financial year was reduced by 25 per cent, compared to the previous financial year.

After the announcement, Downer EDI shares soared to $3.68 before closing 20 cents, or 5.85 per cent, higher to $3.62.

Downer had previously noted an increasing level of uncertainty around the level and timing of government and private sector investment in infrastructure in Australia and New Zealand.

Mr Fenn said at the meeting that a number of prospective projects had been deferred in the past two months.

"We do anticipate that competition for available work will increase, presenting challenges but also opportunities," he told shareholders.

"Against this background, Downer's work-in-hand remains at solid levels and our industry-leading businesses are well placed to capitalise on the pipeline of opportunities in the markets in which we operate."

Chairman Mike Harding told shareholders that he was unable to say when the company would resume paying dividends.

"The board's position is that we would like Downer to pay dividends as soon as it is appropriate, having regard to the company's performance, its balance sheet strength and its capacity to distribute franking credits," he said.

"The board will monitor these criteria closely during the year."

Mr Harding said the company would continue to focus on improving its risk management processes.

"Risk and project management are the lifeblood of a company like Downer and getting them right will be a key foundation for our future success," he said.

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