Downer EDI Shares Fall 20% on Late Trains

Australian Engineering and infrastructure management service company,Downer EDI (ASX:DOW) have seen their shares fall a record 20 percent after an announcement to the Australian stockmarket that the production of the 78 new Waratah trains was running late. Downer EDI announced that the company faces another six months of delays before any train delivery, it had been too aggressive with its production scheduling and required more staff with experience of working on large train projects. At the market close Downer EDI shares were 20.13 per cent lower at $3.61.

Downer EDI expects a loss of $118 million on preliminary figures. The company expects EBIT to be $132 million. itch Ratings downgraded the company to "BBB-" from "BBB". Fitch yesterday put Downer on watch for another downgrade to its credit rating on the announcement.

In December, Downer EDI said it expected to present the first Waratah train set after the successful completion of testing "in late December and January 2011". However it seems to be that the train may not be delivered until late April because of defects in the train's computer system and the need to integrate different software. It is expected to enter passenger service in late May or early June 2011, which is 13 to 14 months behind schedule.