The engineering and infrastructure services group said the 18-month alliance would secure some 400 jobs in the region.

The company has already been providing engineering work to Xstrata’s Liddell and Mount Owen coal mines in the Hunter.

The scope of work under the alliance will include civil, structural, mechanical and process work, electrical instrumentation and coal operations, and the relocation of a 500-kilovolt power line plus a new line to a mine substation in the area.

Downer EDI managing director and chief executive Geoff Knox said the deal demonstrated the company’s “sound outlook”

The company booked a net profit after tax for the last half of $85.4 million, up 4% on the same time in 2007.

Turnover was up 6% to $2.9 billion, while earnings before interest and tax came to $138.5 million, also up 6%.

Downer’s order book is also still strong, with some $11.5 billion in the works, up 14% on the second half of 2007.

Shares in the group defied the market gloom today to end the session 28c or over 7% higher at $4.02.

Meanwhile, Citi analysts have run their rulers over the company and said its recent profit report was of a “higher quality” than its peers in the services sector.

The bank said the company had considerable underlying strength and rated the company a buy on its “gradually improving business, quality new management, relative defensiveness, low debt, strong cash flow, and cheap valuation”

However, the analysts warned there were challenges facing the company, including risk management and forecasting, and the possibility the company could take too long to respond to changing conditions.