Macmahon struggles in tough market
Contract miner Macmahon Holdings has pointed to a "challenging year ahead" amid increased competition for new contracts with little optimism of a turnaround.
The company has quit the construction sector, opting to focus solely on contract mining, 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, increased competition for tenders along with margin pressure as a feature of trading conditions.
"The market is very tough and competition for new work is fierce," chief executive Ross Carroll told shareholders at the meeting, while pointing out the tender pipeline remains 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 contract renewals of $383 million playing a key role.
Even with the shift away from construction, Macmahon has an ongoing liability for projects for which warranties have been provided. It has also been hit by slow payments for mining projects, specifically the Tavan Tolgoi coal project in Mongolia.