Engineering contractor Macmahon Holdings will cut 360 jobs and freeze wages, after forecasting second-half profits will collapse.
Macmahon's share price plunged almost 40% after the announcement that full-year net profit to June 30 now is expected to be between $15 million and $20 million.
Late this morning, Macmahon Holdings was trading at 33.5 cents, down 20.5 cents, or 37.96%.
Perth-based Macmahon said in a statement on Monday that first-half profit was $14.1 million.
This means that profit in the second half is likely to be about $6 million at best, and just over break even at worst.
The company said that during the past four months it had cut employee numbers by about 420, and another 360 would go during the next two months.
"In addition, Macmahon has implemented a salary freeze across the company,'' the statement said.
It predicted the redundancies, plus other savings, would deliver an annual cost saving of about $10 million.
The company said it had experienced a challenging few months.
Some mining contracts were cancelled and scaled back, while wet weather hampered operations in Queensland and Western Australia.
There was slower than expected progress in claim recovery and variations on two construction contracts.
"These impacts, in conjunction with restructuring and redundancy costs, will lead to a significantly lower than expected profit for the second half of the 2009 financial year,'' the company said.
Chief executive officer Nick Bowen said client-driven reductions in activity had reduced demand for contract mining services.
"We've seen very significant cutbacks across nickel, copper, uranium, diamonds and very recently in coal,'' he said in the statement.
The dramatic reduction in the demand for resources had hurt Macmahon's business, with monthly revenue between 30 and 40 per cent lower than six months ago.
That equated to a $250 million reduction in annual revenue.
Macmahon currently has $900 million in revenue secured for the 2010 financial year, compared to $1 billion for 2009 at the same time last year.
AAP
