The company now expects to report net profit of around $180 million in fiscal 2016, down from its previous target of $190 million.
It said profit for the six months to December 31 stood at $72.1 million, down 23.9 per cent from a year ago.
Revenue for the half year fell 1.2 per cent to $3.5 billion, while the company's order book at December 31 stood at $18 billion, compared to $18.5 billion six months earlier.
Chief executive Grant Fenn said the company faced intense competition, while conditions in the mining and energy markets remained very challenging.
"Commodity prices remain very low with a significant flow on effect on business investment and operating expenditure," he said.
The company's main mining division, which carries out contract mining and earthmoving, has suffered a sharp drop in revenue in the past 18 months, hit by contract completions and volume reductions amid falling commodity prices.
To offset the impact, Downer is simultaneously building capability in other divisions, particularly in light rail design and construction and utilities services.
The company is among four shortlisted bidders for the NSW inter-city fleet project for the supply and maintenance of a new fleet of around 520 passenger carriages. The group is also among the shortlist to supply 37 high-capacity trains for the Victorian government.
However, a consortium it was part of failed in a bid to build a new light rail system in Canberra. As a result, the company has accounted for a $13 million write-off in pre-bid costs in its half year accounts.