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Macmahon exits West Perth

Macmahon exits West Perth

Struggling mining contractor Macmahon Holdings will vacate its head office in West Perth in favour of a maintenance base at Perth Airport as part of efforts to become more competitive.

About 70 Macmahon staff will make the move over the next few months despite the company having more than four years left to run on its lease.

Impairments of $125 million to $135 million flagged yesterday mainly comprised writedowns of mining equipment but included a provision for an onerous lease on the offices. The company plans to sublet the space.

The unaudited pre-tax charge came out of a mid-year review led by executive chairman Jim Walker, who replaced managing director Ross Carroll two weeks ago.

Mr Walker has been identifying costs to cut to help the contractor make more competitive bids in a cutthroat tendering environment.

"This review took into account the continued low commodity prices and challenging market conditions for the mining services sector," Macmahon said.

"Macmahon now considers that demand for the company's services will remain subdued for longer than anticipated."

Once the office move is completed, the contractor will have about 250 people working at the airport facility. Up to 45 employees were laid off late last year.

The impairments include a goodwill writedown for the underground mining division. Macmahon said the charge did not affect its cash flow or existing operations, and it continued to comply with banking covenants.

Its shares fell 0.2¢ to 5.5¢.

·Downer EDI, which beat Macmahon last month to a $2 billion Queensland coal mining contract, maintained its full-year forecast despite a first-half profit fall. Downer EDI said it was on track for an annual net profit of $210 million. It made $95 million in the first half, down 4 per cent.

Chief executive Grant Fenn described it as a solid result in a difficult environment.

"Mining-based construction and services markets remain subdued," Mr Fenn said. "Our mining-related consultancy businesses were hit . . . hard." Downer shed 4¢ to $4.45.