Downer CFO quits, CBA and NAB raise rates ahead of RBA decision and Aussie Broadband celebrates record half year

Downer EDI’s (ASX: DOW) Michael Ferguson is the latest head to roll following the company’s historical revenue misreporting scandal and a “very challenging” half year (H1 FY2023) performance.

Mr Ferguson revealed he had resigned from the chief financial officer position on Wednesday and would assist the company with his replacement’s transition over the next six months.

In December last year, Downer revealed it had identified “historical misreporting of revenues” and work progress in one of the contracts relating to its Australian Utilities’ business.

The historical misreporting led to an overstatement of earnings totalling $22.2 million between April 2020 and 30 June 2022.

This has resulted in $12 million loss in post-tax earnings for the contract in H1 FY2023.

For H1 FY2023, Downer’s earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 21.3% from $181.6 million to $142.9 million for the period.

Downer’s former chief executive officer and managing director Grant Fenn announced his resignation from the company in December, just before the historical misreporting announcement.

He officially handed over the reins last month to Peter Tompkins.

Major banks increase rates ahead of RBA decision

Australia’s major banks Commonwealth Bank (ASX: CBA) and the National Australia Bank (ASX: NAB) have increased their fixed home loan interest rates ahead of the Reserve Bank of Australia’s (RBA’s) monthly meeting next Tuesday.

The major banks usually wait until the RBA’s interest rate decision on the first Tuesday of every month, so the earlier move is out of process.

But, most spectators are certain the RBA will hike the official cash rate again from 3.35% – with a consensus it will increase by 0.25% to 3.6%.

Mounting inflation and cost of funding pressures have been cited for banks’ early move to increase rates.

Aussie Broadband posts record half year

In more positive news, Aussie Broadband (ASX: ABB) revealed a record half year result, including a 65.3% increase to its revenue for H1 FY2023.

H1 FY2023 revenue reached $379 million – up from $229.3 million in H1 FY2022. The H1 FY2023 revenue figure was also up 27% on H2 FY2022.

This propelled Aussie Broadband’s net profit after tax (NPAT) to surge 516% to almost $8.6 million compared to $1.4 million in H1 FY2022.

EBITDA for H1 FY2023 reached $41.4 million and was higher than EBITDA for the entire FY2022 full year.

Underpinning this performance was an increase in market share across all of Aussie Broadband’s segments as well as an expanded product offering.

It was also bolstered with the realisation of $2.2 million-worth of synergies since acquiring Over the Wire.

Commenting on the result, Aussie Broadband co-founder and managing director Phillip Britt said a key to the successful performance was the company’s ongoing business expansion, continued growth in the government and enterprise segments as well as above market growth in residential broadband.

“Our focus on delivering fast, reliable and affordable broadband services is resonating with businesses of all sizes, and we are proud to be working with some of Australia’s leading companies to support their growth and success.”

Mr Britt said Aussie Broadband now services more than 7% of Australia’s NBN population and has invested in infrastructure upgrades to deliver faster and more reliable services.

InvoCare dives into the red

Higher costs, inclement weather and labour shortages dumped Australia’s largest funeral and crematorium company InvoCare (ASX: IVC) into the red for the full 2022 year ending December (FY2022).

On Monday, the company posted a $1.8 million loss for FY2022, despite revenue rising 12% to $588.5 million and operating EBITDA up 9% to $136.1 million.

However, InvoCare chief executive officer Olivier Chretien said he is confident in the company’s ability to navigate “short-term uncertainties” including fluctuating death rates, tight labour markets, rising inflation and cost pressures, and extreme weather.

“With a growing and ageing population, the long-term fundamentals of our business remain positive, and the Group is well placed to deliver near and long-term shareholder value.”

Despite the loss, InvoCare increased the FY2022 dividend by 17% to 24.5 cents per share.

Appen’s earning collapse

Artificial intelligence (AI) platform service provider Appen’s (ASX: APX) underlying EBITDA collapsed almost 83% to $13.6 million for FY2022 from $447.3 million in FY2021.

The plunge was attributed to challenging market and macro conditions, which resulted in weaker digital advertising revenue and a slowdown in spending.

Revenue for the period dropped 13.1% to $388.5 million. The substantial fall in EBITDA was said to be a combination of reduced revenue, lower gross margin and increased costs to support growth in China and the Quadrant product.

Due to the substantial drop, Appen declared there would not be a final dividend to ensure “appropriate allocation of capital”.

Recently appointed Appen chief executive officer Armughan Ahmad said the company had a lot of work ahead to establish “greater operational rigour” to accelerate innovation, along with growth in sales and profits.

AI is forecast to contribute $16 trillion to the global economy by 2030.