Macmahon (MAH) is a leading contractor providing services to customers in both the mining and civil construction sectors.
The company employs more than 3,000 people throughout Australia, New Zealand and South East Asia.
MAH consists of two key business units – mining and construction – and its clients and JV partners are typically big names, including BHP Billiton and Leighton Holdings.
A continuation of the current mining boom is likely to benefit mining services providers such as MAH, so it would be considered one of the stocks to watch over the longer term.
However, on 19 October, MAH warned that its construction business has experienced issues that will impact the division’s earnings in the shorter term.
In WA, a rail contract will not deliver its forecast profit due to cost issues, and a lower number of contract wins will result in weaker-than-forecast revenue for the division.
MAH is now forecasting a breakeven result for the December half, whilst second half profit will grow $20 million more than forecast due to strength in the mining business.
MAH shares plummeted 21% on the day of the profit warning, making it the worst performer in the Australian stock market.
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