Downer EDI cuts profit forecast after rail bid fails

Downer EDI has lowered its profit forecast for 2017 after missing out on a NSW rail contract worth $2.3bn.

Downer EDI's rail division in Maryborough, Queensland.

Downer EDI, one of Australia’s largest engineering contractors and train builders, has lowered its profit forecast for the 2017 financial year after failing to win a rail contract worth $2.30 billion.

Downer EDI (DOW) said it’s now targeting a net profit of $163 million in the year through June 2017 after it wasn’t chosen to build a new intercity train fleet in New South Wales.

The company had previously targeted a net profit of roughly $170 million in its current financial year.

The winning bidder for the contract was the RailConnect NSW venture comprising UGL (UGL), Hyundai Rotem Company and Mitsubishi Electric Australia.

The NSW state government tasked the consortium with replacing trains carrying customers from Sydney to the Central Coast, Newcastle, the Blue Mountains and the South Coast.

Downer, which had submitted a competing bid for the contract with CRRC Changchun Railway Vehicles, said its share of costs before tax totalled $10 million.

Dow Jones Newswires