Contract miner Macmahon warns of challenging times
Contract miner Macmahon Holdings has pointed to a "challenging year ahead" amid increased competition for new contracts with little optimism of a near-term turnaround.
The company has quit the construction sector, opting to focus solely on contract mining at a time when the downturn in resources prices has resulted in miners and explorers aggressively cutting costs.
At Friday's annual meeting the company pointed to the continued volatility of commodity prices and increased competition for tenders along with margin pressure.
"The market is very tough and competition for new work is fierce," chief executive Ross Carroll told shareholders, while pointing out the tender pipeline remained high at $2.5 billion.
Its caution on the outlook prompted it to maintain unchanged its fiscal 2014 revenue forecast at $900 million to $1.2 billion, even though when it released its annual report in September, it said it had $900 million of work in hand, with renewals of $383 million playing a key role.
Even with the shift away from the construction sector, Macmahon has a continuing liability for projects for which warranties have been provided.
At the same time, it has been hit by slow payments for mining sector projects, specifically the Tavan Tolgoi coal project in Mongolia.
It is also involved in litigation after the suspension of work on the sinking of a shaft in Cobar, NSW, over a claim for unpaid work.