04/05/2015 - 10:22

McAleese lowers outlook on Atlas deal

04/05/2015 - 10:22

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Road haulage business McAleese Group has flagged a number of impairments and a significant hit to its earnings as it prepares to recommence haulage services at Atlas Iron’s Abydos and Wodgina mines this month.

Road haulage business McAleese Group has flagged a number of impairments and a significant hit to its earnings as it prepares to recommence haulage services at Atlas Iron’s Abydos and Wodgina mines this month.

On Friday, Atlas announced it had struck a deal with its major service contractors to resume operations at two of its three mines.

McAleese said it was working to finalise commercial terms with Atlas, including a lower haulage rate, while its share of profit would depend on the Australian iron ore price.

It is also in discussions about the potential recommencement of road haulage at Atlas’s Mt Webber mine.

However, McAleese warned that as a result of the material changes to its contract with Atlas, combined with a weaker trading environment for its other divisions, it expected earnings before interest, tax, depreciation and amortisation to fall to about $70 million from $85.3 million last financial year.

It had previously forecasted EBITDA for FY15 to be between $85 million and $90 million.

“Net debt at June 30 is now expected to be $160 million to $165 million, reflecting lower EBITDA and adverse movements in working capital offset by a $4.4 million reduction in net capital expenditure,” McAleese said.

“This net debt forecast anticipates non-core asset sales of about $10 million on or before June 30.”

The company said it anticipated a non-cash impairment of its heavy haulage and lifting division, its Heavy Haulage Australia subsidiary, and goodwill in its bulk haulage division.

“The carrying value of all divisions will be assessed as part of the company’s usual year-end process,” it said.

“The company’s current initiatives are aimed at improving the viability of Atlas’ mines and restructuring our businesses to reflect ongoing weakness in the resources and infrastructure sectors.”

McAleese has appointed 333 Group to conduct an independent review of its financial performance.

Shares in McAleese were 45 per cent lower to 8.8 cents each at 10:20am.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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