Downer EDI Ltd says it’s unclear whether market volatility will have a negative effect on future projects after the firm posted a $27.8 million full year loss.

The engineering and infrastructure services company said the loss was due to a $250 million provision on the Waratah trains project in NSW.

Downer EDI’s loss for the year to June 30 was down from a $2.96 million net profit in the previous year.

Included in the result is an additional $250 million provision on its Waratah trains construction work, a $7.8 million impairment on its New Zealand resources business and an $8.8 million impairment on its UK works business.

The company said there was a “short-term risk” relating to the timing of projects and it was “unclear” whether broader financial market volatility would have a negative effect on the project pipeline.

The Sydney-based company said it had about $20 billion worth of work in hand, with $7.5 billion in mining, $5.2 billion in rail, $5.2 billion in works and $2.2 billion in engineering.

Group revenue increased by 15 per cent to $6.98 billion.

Wet weather had hampered the works business, while intense competition and margin pressure impacted the engineering business.

Tough economic conditions, plus the impact of the Christchurch earthquakes and wet weather, hit the New Zealand business.

Excluding the impairment charges, Downer EDI’s net profit for the year to June was $166.4 million, down 16 per cent from the previous corresponding period.

Earnings before interest and tax, excluding impairments, was $292.2 million, down eight per cent from a year earlier.

Downer forecast EBIT (earnings before interest and tax) of around $340 million for the 2010/11 financial year, and net profit of around $180 million.

For the year to June, the greatest improvement in revenue was delivered by the company’s mining division, with revenue of $1.5 billion in the year to June an improvement of 51 per cent from the previous year.

Engineering revenue was $2.3 billion, up 21 per cent, rail works contributed revenue of $1.1 billion, up eight per cent, and works division revenue was $2.1 billion, down 0.5 per cent.

No dividend will be paid for the full year.

Shares in Downer EDI ended four cents, or 1.12 per cent lower at $3.54.