Macmahon positive for FY21

ASX-listed Macmahon Holdings has reported higher annual earnings, attributing the growth to contracted work in its underground mining division.

Macmahon’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew 6 per cent to $121.2 million in the year to December 31.

However, its revenue fell 5 per cent to $652.5 million, due to a change in accounting treatment at the Batu Hijau copper-gold mine in Indonesia. Macmahon said COVID-19 had restricted control of consumable items at Batu Hijau, and so some revenue and costs have not been recorded.

As a result, Macmahon has lowered its full-year revenue guidance from between $1.4 billion and $1.5 billion to $1.3-1.4 billion.

Though, Macmahon said the Batu Hijau accounting treatment would not impact its full-year earnings, and so has maintained EBIT(A) of between $90 million and $100 million.

Its order book stood at $4.17 billion at December 31, which includes $250 million in contracted work at the Foxleigh coalmine in Queensland and a $20 million contract extension at Pantoro’s underground gold operations in Western Australia.

Macmahon expects its order book to rise to about $4.21 million following a $220 million contract awarded to the business for on Silver Lake Resources’ Deflector copper-gold underground mine, also in WA.

Further, Macmahon managing director Michael Finnegan said many existing clients had advanced their projects into the tender stage. 

"This pending wave of potential awards over the next 12 months is reflected in our signifcant tender pipeline and our focus will be on converting more opportunities to drive growth into FY22 and beyond," he said.

Macmahon has a current tender pipeline of about $7 billion, which includes $3 billion in work with new clients and $1.2 billion in underground work.

The board has declared a 20 per cent-franked, interim dividend of 30 cents per share, up from 20 per cent on 1H20.

Shares in Macmahon closed down 6 per cent to trade at 23 cents.