Ann: Update on Christmas Creek Contract,FMG-DOW.AX, page-3

Problem is that the mining div has been making an EBIT margin of about 8%, while the rest of the business is around 4%. So two units of "other" revenue equals one unit of mining. Minings EBIT has still been around 40% of the bus, but every time a big contract is lost you end up with a lower EBIT margin as overheads either become a higher proportion of the revenues, or you get critical mass issues that can effect the ability to win or maintain other business if you cut overhead costs.

Saying that - the rail div has a decision coming soon for the big $2.8b nsw intercity. Although the Waratah project was a hopeless debacle, the public have apparently been impressed by the trains that were delivered late and over budget - so I guess they may still have a 25% chance as 1 of 4 contestants.

Not implying this loss of contract is a massive surprise. I shorted it yesterday for a quickie.