Macmahon slashes profit forecast

“With increased uncertainty in the mining sector and deteriorating market conditions, Macmahon is now seeing lower than anticipated tendering activity, with a number of clients recently advising that they are deferring or delaying proposed mining projects,” the company said in a statement. “We also note that several of our non iron ore and coal clients have intimated that there will likely be a reduction in production volumes,” Macmahon said.However, the company said that in the construction sector specifically, tendering activity remains robust in selected areas. “Government funded projects continue to be tendered as state and federal governments increase their capital expenditure to help maintain economic activity. “In the resource related construction market, selected opportunities remain in the iron ore and oil and gas sectors. However, as has been extensively reported in the media, clients are cutting back their capital expenditure in other resource sectors.”But the company said that for the full year, it was now seeing lower than expected growth for its mining business and a greater proportion of total revenue being derived from its traditionally lower margin construction business. “We currently have $1.4 billion of work contracted for FY09, and now expect revenue in the vicinity of $1.5 billion for the year providing we do not have material volume reductions or contract cancellations during the second half,” the company said.Macmahon now anticipates full year profit after tax to be similar to the $48 million achieved in FY08, but it said this result was reliant on no material changes to its business in the next six months.

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