Macmahon shares slump 17%

Contractor says revenue stream, margins at risk as miners slash costs.

Contractor Macmahon Holdings (MAH) shares have tumbled after the company posted a full-year loss worse than its guidance and cautioned for more bad results in the current year.

In its outlook Macmahon tipped a sharp fall in revenues amid "highly uncertain" operating conditions and has warned its earnings stream is at risk and margins under pressure as miners seeks to slash costs (see Brendon Lau's A mining services revival?).

The group swung to a full-year loss of $29.5 million from a $56.1 million profit last year after booking a $73.1 million loss on the sale of its construction projects to Leighton Holdings (LEI).

This was an unwelcome surprise for investors, as Macmahon had forecast a full-year loss of between $10 million and $20 million in its half-year accounts.

The company's share price plunged 17.1% to 14.5 cents at 1301 AEST.

Revenue also dropped, to $1.75 billion, from $1.87 billion in the prior year.

MacMahon said revenue for 2013-14 was expected to fall to between $900 million and $1.2 billion, warning that it "remains highly uncertain due to fewer new work opportunities, the potential for scope reductions and contract deferrals by clients and increased competition within the sector".

In May the company had guided for revenue at around $1.4 billion for 2013-14.

"Margins are also expected to be under pressure as clients seek cost reductions," the group said.

The group will not pay a dividend for 2013.

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