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Macmahon to post loss before new future

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AAP

2013-02-27

Mining services company MacMahon Holdings will post a loss of up to $20 million this financial year because of its troubled construction business.

But the sale of the construction operations, approved by shareholders on Tuesday, will enable the company to focus on its better performing mining operations, it said on Wednesday.

MacMahon made a net loss of $60.7 million in the six months to December 31, due to almost $61 million in writedowns on its construction projects.

Leighton Holdings has bought all of the construction business' projects, and costs associated with the sale, plus ongoing losses, are expected to lead to a loss of between $10 million and $20 million for Macmahon in the full 2012/13 financial year, Macmahon chief executive Ross Carroll said.

Macmahon shares were down two cents, or 5.9 per cent, at 32 cents at 1129 AEDT.

Macmahon's mining business made a profit before tax of $38.4 million in the six months to December, up 20 per cent on the previous corresponding period.

The business provides drilling, blasting and other services for clients including BHP Billiton and Fortescue Metals Group.

Macmahon expects it to make a pre-tax profit of more than $85 million in the year to June 30.

"The recent growth of our mining business in a time of challenging market conditions highlights its sustainability and holds the company in good stead for its mining focused future," Mr Carroll said.

Leighton chief executive Hamish Tyrwhitt said Macmahon's construction contracts would now begin transferring to the John Holland business, expanding that company's presence in the Northern Territory.

"We are planning a seamless transition of the projects," Mr Tyrwhitt said.

Indian-owned firm Sembawang Australia had also been trying to buy MacMahon's construction business, and has vowed to maintain its interest despite shareholders approving Leighton's purchase.