looking to rise again today good depth this mornin, page-6

***macmahon rebound gathers pace*** Macmahon rebound gathers pace

Ben Oliver


Monday, November 29, 2004
FRESH from securing $100 million of new work in the past week, Macmahon Holdings chief Nick Bowen said the contractor was close to signing a "sizable" contract with Alcan at its $1.4 billion Gove alumina expansion project in the Northern Territory.

The most recent contract wins were a two-year contract with Bendigo Mining to develop the Bendigo gold mine in Victoria and a 12-month contract extension at BHP Billiton's Mt Whaleback iron ore expansion project in Western Australia. Bowen told attendees at last Friday's annual general meeting in Perth the latter deal would return more than $220 million in revenue in fiscal 2005.

The new contracts had taken Macmahon's total work at hand to $760 million, $24 million shy of the level recorded at the end of the last financial year.

"Negotiations are nearing completion to secure a major contract to carry out the civil works component of the Alcan Gove third stage expansion – G3 project in the Northern Territory," Bowen said.

"Based on our contract successes and our increased revenue forecast of $580 million, we now expect full year profit after tax to exceed $19 million, a 65% uplift in last year's profit. This result will equate to earnings per share of around 5c."

Revenue was forecast at $580 million, but could exceed $600 million, Bowen said, on the back of strong mineral demand from Asia and large transport infrastructure project opportunities outlined in the Federal Government's AusLink program.

Bullish forecasts for all divisions were icing on the cake for Bowen, recruited four years ago to lead the company's rebuilding program after it ran into severe financial problems.

"Of equal importance is that in this four-year period from July 2000 to June 2004 Macmahon has generated $144 million cashflow from operations, reinvested $111 million into the company, but at the same time reduced net debt including operating leases by a significant $159 million," the company said in a statement.

Macmahon's civil construction arm was expected to post revenue of $275 million this financial year and $300 million-plus in 2006. The equipment hire and refurbishment subsidiary, Allplant, was continuing its strong growth, with revenue predicted to more than double in 2005 to $40 million and reach $60 million the year after, Bowen said.

"We are currently seeing unprecedented growth in opportunities across all of our business units," he said. "This growth emerged some 12 months ago, but has accelerated in the last six months and is now at levels I have not seen in the last 20 years. We are seeing a combination of significant opportunities in civil infrastructure combined with increased requirements from the resources industry for our services."

As well as providing sound financial returns, Bowen said Allplant had given the contractor greater labour flexibility. "We have a real focus on retaining staff, training and development," he said.

"With Allplant, if we don't have the work in other divisions, we can rotate staff through labour hire, and retain a high rate of workers."