where to from here?, page-3

Thanks Nicolelee. I think the article clarifies the risks associated with the Waratah contract. I would have thought management could have explained this in more plain English.

I do think this bit is misleading though:

The latest profit results released by Fenn have left investors cold. Net profit was a paltry $3 million as the firm's troubled New South Wales rail project caused a 98 per cent plunge in net profit and even more chilling was that the earnings outlook for 2011 would be flat despite two new contracts worth $5 billion.

This suggests profit next year would be $3 million. This is what Downer said:

Overall for the 2011 financial year, we expect improvement of around 5% in EBIT and, reflecting an
expected increase in effective tax rates and interest expense, NPAT in line with the underlying NPAT
result in 2010.

Underlying NPAT for 2010 was 197 million and that is the result forecast by Downer and they are obviously not anticipating individually significant items next year.

It is almost customary for incoming CEOs to downgrade forecasts to give themselves some fat to work with. It is comforting to know Grant has not done that (yet?).