Macmahon Holdings said that the fewer contracts for its construction arm along with problems related to a West Australian rail project have plunged the profit forecast by half. A spokesperson said that the company would post profits just above $40 million.
The shares in the mining and construction contractor company also went down 20% after the announcement. The general manager for corporate finance at Macmahon Holdings, Craig Dettman said that the mining business would continue to grow as forecast but the conditions have impacted on the profitability of the construction business.
Macmahon chief executive Nick Bowen said that this was a disappointing and unacceptable result for the company. He also said that a full analysis of the construction business was being undertaken to implement the necessary actions to improve performance.
Analysts feel that the contract which lost the company so much money was Macmahon Holding’s joint venture with Leighton to duplicate 220 km of rail line in the Pilbara region to help BHP Billiton increase its iron ore production. However neither Macmahon nor BHP Billiton is commenting on the contract right now.