Mining slump, lost contract bad news for Macmahon
Macmahon Holdings' first financial result as a mining-only contractor has been a disaster, with a worse than expected loss and its shares punished.
The company's outlook for the new financial year was also negative as it warned it was at risk of losing contracts in a difficult and competitive mining market.
Macmahon posted a net loss of $29.5 million, worse than an expected loss of $10 million to $20 million and compared with a $56.1 million profit a year ago.
The company's shares closed down 3.5¢, or 20 per cent, at 14¢.
The shares were nearly four times that at 56¢ at the end of August last year, but the company has performed poorly since then.
The weak performance includes a net loss of $73.1 million from its construction business that it sold to Leighton. But the mining business' after-tax profit of $43.6 million was lower than analysts' forecasts of $47.4 million.
It has had to make non-cash provisions for disputed claims, higher doubtful debts and asset impairments, the company said.
"The recognition of these provisions reflects the current economic uncertainty affecting the sector," it said.
It also warned it might lose its contract operating Yancoal's Cameby Downs mine that is due for renewal in November, while lowering revenue expectations for others and facing more competition for new work.
Macmahon had a shaft-sinking contract at the CSA Cooper mine in NSW abruptly cut in June, which it had forecast to contribute $80 million of revenue this year.
Revenue was 33 per cent higher at $1.2 billion and it has forecast revenue of $900 million-$1.2 billion this year, but says that is uncertain.
Chief executive Ross Carroll said the company had reduced risk by offloading the construction business and the company was one of few mining services groups to grow revenue and its order book.
"We are now better positioned to manage current market challenges and to deliver more sustainable returns for shareholders," he said.