A slowdown in resource spending and losses from discontinued construction operations have forced a mining and engineering services firm in Australia to incur a significant financial loss in 2012/13.
In its latest profit announcement, Perth-based Macmahon Holdings says it incurred a net loss after tax of $29.5 million in 2012/13.
While the overall loss was caused by a $73.1 million write-down in the firm’s construction operations, which it sold to Leighton during the year, the company also says the result is worse than a $10-$20 million loss previously expected because of provisions associated with disputed claims, doubtful debts and asset impairment reflecting current economic uncertainty and a pull-back in mining operations.
Excluding these write-downs and provisions, Macmahon says it delivered an underlying profit after tax from continuing operations of $43.6 million.
Following the sale of its construction operations, Macmahon has undergone a substantial transition and is now focused exclusively on mining operations. The company provides mine management services for surface and underground operations from engineering and mine development to materials delivery.
The firm has had challenges in delivering, however. A shaft sinking contract at the CSA Cooper mine in New South Wales which was supposed to deliver $80 million in revenue this year was cancelled abruptly in June, and the company has warned it might lose its contract operating Yancoal’s Cameby Downs mine due for renewal in November.
The company's chief executive officer, Ross Carroll, acknowledges the latest results were disappointing, but says the transformation of the company should stand it in good stead to ensure a return to profit next year – albeit with revenue projections ($0.9 - $1.2 billion) remaining ‘highly uncertain’ due to fewer work opportunities, potential scope reduction and contract deferral and increased competition, all of which are also likely to place pressure on operating margins.
“The completion of the sale of construction projects to Leighton Holdings ensures we are now wholly focused on our mining operations and building on the good results we have achieved over many years,” Carroll says, adding that a $3.2 billion forward order book represents a ‘solid base’ from which to pursue new work.
“While the overall financial result has been disappointing, we are now better positioned to deal with the current challenges facing the market and to continue the growth of our mining business.”