New Macmahon CEO says boom over

Newly installed Macmahon chief executive Ross Carroll says large scale rail projects will be off the agenda under his leadership as the company adapts to life after the resources boom.

Mr Carroll says exponential growth in the resources sector over the next three or four years that some have predicated "was not going to come".

"Definitely the boom's over," Mr Carroll told ABC Television on Sunday.

"I think we are much more reliant on current production volumes rather than all this new work being out there.

"Australia is partially suffering because of the lower commodity prices but also because of the very high cost of doing business here."

The Perth-based company said on Wednesday it expected to win fewer new construction work contracts in 2012/13, given recent market volatility and the associated uncertainty relating to the commitment and timing of future projects.

Moreover, Macmahon said it had suffered cost overruns on its $100 million Hope Downs 4 rail earthworks contract in Western Australia's Pilbara region.

As a result, net profit for 2012/13 was now expected to come in between $20 million and $40 million, compared with $56.1 million in the prior year.

In August, the company predicted profit growth of 20 per cent.

Mr Carroll, who was formerly chief operating officer of Macmahon's mining business, was named as chief executive after Nick Bowen announced his resignation following the profit warning.

He said Macmahon was expected to lose a "significant" amount on the rail project, but put the figure at less than $50 million.

Moreover, there would be some "big changes" as the company learnt the lessons of the troubled project.

"Certainly we will be de-risking the business and need to ascertain what parts of the business we are going to keep," Mr Carroll said.

"We won't be doing these big large scale rail projects in the Pilbara again, we'll be doing different projects and making sure that it's very well managed."

AAP j

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