More Macmahon jobs to go amid cuts

Peter Williams
More Macmahon jobs to go amid cuts

The board of Macmahon Holdings is expected to sign off this week on further job cuts and restructuring to show financiers it can survive a crippling contract loss.

After cutting about 95 overhead jobs in two rounds in November and February, the mining contractor is tipped to make dozens more redundant to bring costs into line with its reduced revenue.

Professional services firm KPMG has since last month been conducting an exhaustive review, Project Metal, of the business to recommend cost-cutting measures.

Macmahon is about one-third way through a 90-day period with financiers to renegotiate its banking facility and reduce debt.

Executive chairman Jim Walker last month said nothing was off limits under the review.

Macmahon's $260 million-a-year contract at Fortescue Metals Group's Christmas Creek iron ore mine in the Pilbara ends next month.

The work was reallocated to Downer EDI under a consolidation of two Fortescue contracts. About 400 of Macmahon's 600-strong workforce at the miner are expected to stay on with Downer.

Macmahon has so far been unable to resolve a seven-month dispute in Mongolia with a State-owned coal miner. It has been counting on a cash settlement to ease its financial difficulties.

The company will soon consolidate corporate staff at premises near the airport after vacating its West Perth headquarters.

Macmahon suffered a $112 million loss in the first half, mainly because of equipment writedowns. It is tipping 2014-15 revenue of $600 million to $700 million.

However, the consequence of the loss of the Fortescue contract will bring revenue down to about $300 million to $400 million a year.

Macmahon's share price closed on Friday down 0.1¢ to 4.9¢.