-- CEO Nick Bowen resigns, effective immediately
-- Chief Operating Officer Ross Carroll to take over as CEO
-- Full-year profit now seen at between A$20 million and A$40
million
-- Company cites increasing uncertainty for new construction
work
(Recasts the first paragraph, adds detail on the resignation and
earnings guidance throughout)
By Robb M. Stewart
MELBOURNE--The chief executive of Macmahon Holdings Ltd.
(MAH.AU) has resigned, as the Australian construction and contract
mining company warned its earnings could fall as much as 64% this
fiscal year amid increasing uncertainty over the outlook for new
building work.
Macmahon said Wednesday that Nick Bowen had resigned as chief
executive and managing director with immediate effect, and would be
succeeded by Ross Carroll, chief operating officer of the company's
mining division.
No reason for Mr. Bowen's departure was given in a statement to
the Australian Securities Exchange. Chairman Ken Scott-Mackenzie
said the board had accepted the resignation and thanked Mr. Bowen
for his leadership during the past 12-and-a-half years.
Separately, Mr. Scott-Mackenzie said a jump in costs for rail
work for Rio Tinto PLC's (RIO) Hope Downs 4 iron ore mine in
Western Australia and uncertainties surrounding the commitment and
timing of new projects would dent earnings for Macmahon's
construction division this fiscal year.
The company said it now anticipates a profit of between 20
million Australian dollars (US$20.9 million) and A$40 million after
tax this fiscal year. The company swung to a A$56.1 million net
profit in the year through June from a loss of A$2.7 million in the
corresponding period a year earlier, and last month said it was
targeting 20% earnings growth this fiscal year owing largely to
additional work it had secured.
The profit warning hit Macmahon's shares, sending them more than
47% lower in early trading. At 0148 GMT, the shares were down 37%
at A$0.335.
Macmahon said a management review of the Hope Downs project had
identified a number of issues with productivity and the order in
which work had to be done to meet a revised completion program for
Rio Tinto. This would result in significant additional costs to
ensure the schedule for laying track is met and that the project is
largely completed in the first half of this financial year, it
said.
The company also has lowered its internal estimate of the volume
of new construction work it expects to secure and perform this
financial year. However, it said outlook for its mining business,
which had been under the direct control of Mr. Carroll, remained
solid.
"The company remains in a sound financial position and will be
vigilant in monitoring changing market conditions," Mr. Carroll
said. "I am confident the company can adapt to these changing
conditions and deliver improved profits."
Mr. Carroll has been with Macmahon for almost six years, joining
as chief financial officer before being promoted to chief operating
officer for mining in early 2011.
Macmahon began the A$99 million Hope Downs project for Rio Tinto
in 2011, building a 53-kilometer rail line and two bridges. Hope
Downs 4 is a new open-cut iron ore mine with an annual capacity of
15 million metric tons, with first production set for 2013.
Write to Robb M. Stewart at robb.stewart@wsj.com
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