Macmahon flags cost cutting
Macmahon Holdings chairman Jim Walker has told investors a review of the business will focus heavily on cutting costs to match market conditions in mining.
Mr Walker took charge of the beleaguered mining contractor last week following the sudden departure of managing director Ross Carroll.
The former WesTrac boss is keen to slash overheads further at Macmahon, hurt by the industry slump, after the sacking of about 45 office staff late last year.
"We've still got a fair bit of cost in the business," Mr Walker told brokerage analysts in a teleconference.
"We are going to work very hard to get that cost structure down so that we can look after the businesses that we've got now and also be flexible enough too, if we do get some new business."
Macmahon has struggled to win contracts in a highly competitive market. It missed out earlier this month when a $2 billion Queensland coal mining contract with Adana Mining was awarded to rival Downer EDI.
Mr Walker said that was unrelated to Mr Carroll's departure - on Thursday after more than two years in the job - which had more to do with the executive's personal goals.
"There was a fair bit of work to be done and Ross thought it was best if he got out of the road to let us get on with it."
Mr Walker warned his review would not be done in a hurry and the outcome was not certain.
"We'll be looking at the strategy of the business, what businesses should we be in, what business perhaps we shouldn't be in," he said.
Chief financial officer Sybrandt Van Dyk said Macmahon was hopeful of resolving within weeks a Mongolian contract dispute.
It is expected to exit the coal project two years early after obtaining a cash settlement.
Mr Van Dyk said a proportion of that would have to go to the contractor's banks. "We won't have all of that money available for capital management purposes, some of it will go to pay back our outstanding debt," he said.
Macmahon's share price closed on Friday at a low of 6¢, valuing the company at $76 million.
Macquarie Group changed its recommendation for the stock from outperform to neutral, and slashed its 12-month price target from 20¢ to 8¢, according to Bloomberg.
