News: Shares plunge as Downer flags $250M provisi

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Shares in Downer EDI Ltd (ASX:DOW) have plunged over 20 per cent today, following news the engineering company will take a $250 million provision related to the Waratah train project in New South Wales.

The latest provision is in addition to a $190 million charge that Downer took on the project in the middle of 2010.

Downer has described the train build as difficult and challenging, but confirmed it fully committed to the project and continuing to work with RailCorp to deliver 78 trains for the state in the shortest time possible.

The first of the trains are now expected to be delivered in late April, pushed back from the original target of January.

In the six months to 31 December, Downer says it expects underlying earnings before interest and tax of around $132 million, up from $87 million in the first half of 2010.

Downer will post its half year results including final details of the Waratah project on 24 February.

Downer EDI's net profit dropped to just over $3 million in the 2010 financial year.