Downer out on train contract

Downer shares plunged 27 per cent yesterday wiping $564 million off its market capitalisation after it announced $190 million in cost blowouts on its $1.9 billion Waratah trains contract and $70 million of other write-downs.

Chief executive Geoff Knox joined Downer in February 2008 with the task of revamping the underperforming company.

Downer blamed the cost overruns on design complexities and resultant project delays. Mr Knox referred to "19,000 engineering comments", in a nod to repeated design changes by the New South Wales government-owned RailCorp. "We do seem to be able to build trains successfully and make good money in other states in this country," he said. Downer shares lost $1.69 to close at $4.58 yesterday.