Downer shares soar on NSW train contract

A $1.7 billion contract to supply new passenger trains to the NSW government has pushed Downer EDI shares to a six-year high.

Engineering group Downer has won the contract to design and build 24 double-decker trains for Sydney and then maintain them for 25 years.

The order from Transport for NSW includes the option for 45 additional sets of trains, as well as two five-year extensions for maintenance.

Downer EDI shares closed 41 cents, or 7.2 per cent, higher on Thursday at $6.08, their highest level since May, 2010.

Downer said its joint venture partner, China's CRRC Changchun Railway Vehicles Co, will manufacture the trains for Downer under sub-contract, while Downer itself will provide the maintenance support.

The order follows a $2 billion contract to build high-capacity metro trains in Victoria that Downer secured in September as part of a consortium including CRRC and the Plenary group.

It recently missed out on NSW's $2.8 billion intercity fleet rail contract, and also failed in another bid to build a new light rail system in Canberra, forcing it to write off $13 million in its 2015/16 accounts.

Downer EDI's main mining and construction divisions have suffered a slowdown over the past two years as contracts are completed and volumes drop amid a prolonged downturn in commodities prices.

The company has looked to build capability in other segments, particularly in light rail design and construction and utilities services, in order to offset the decline in its contract mining business.

Downer has previously supplied the Waratah rail carriages, which currently make up more than half the rolling stock on Sydney's train network.

Chief executive Grant Fenn said on Thursday that 90 per cent of the new design is the same as that of the Waratah carriages.

The Australian Manufacturing Workers Union criticised the award of the contract, saying the decision would send thousands of manufacturing jobs offshore at the expense of people in rural and regional Australia.