Carnage continues for Downer share price on Friday

The Downer EDI Ltd (ASX: DOW) share price is under pressure again on Friday.

In morning trade, the engineering and construction company’s shares are down a further 7% to $3.54.

This means the Downer share price is now down 26% over the last two trading sessions and 40% since this time last year.

Why is the Downer share price being sold off?

Investors have been selling off Downer’s shares this week after the company revealed that it has identified historical misreporting of its Australia utilities business’ revenue and work in progress in one of its maintenance contracts.

According to the release, the company estimates that this misreporting could result in a historical overstatement of pre-tax earnings of between $30 million and $40 million.

What else?

Another disappointment that has put pressure on the Downer share price was the scrapping of its guidance for FY 2023 for unrelated matters.

Downer’s CEO and managing director, Grant Fenn, revealed that “the challenge for the last seven months of [FY 2023] has become too large” to achieve its profit growth guidance of 10% and 20%.

Fenn advised that its “road services and utilities businesses have been heavily impacted by weather” and its “businesses have been battling with staff shortages and supply chain issues.”

In other news, this morning Macquarie responded to the update by downgrading Downer’s shares to a neutral rating and slashed its price target to $4.05.