Transport contractor McAleese has
warned of a massive earnings drop due to the impact of its altered contract
with Atlas Iron.
The company, which hauls ore
from Atlas’ mines to port, announced underlying
full-year earnings were expected to fall to about $70 million from $85.3m in
2013-14.
This is $20 million lower
than the group’s February forecast of $85m
and $90m in underlying earnings this financial year.
The company suffered a 49.4
per cent drop in the price of its shares yesterday on the back of the news and closed at 8.1c.
The trouble started
for McAleese when Atlas decided to close its Pilbara mines in April in light of the falling iron ore price.
Since then McAleese has
struck a deal with Atlas which will see it continue to haul ore from the Abydos and Wodgina mines during May.
This will allow Atlas to keep
mining, but will mean a lower base haulage rate for McAleese with profit share
dependant on the price of iron ore.
McAleese said discussions around
the potential recommencement of mining at the Mt Webber mine were ongoing.
The company also announced a
review of its heavy haulage and lifting division was ongoing, with a non-cash
impairment likely.
“The expected non-cash
impairment reflects low activity levels and a reduced pipeline of capital
projects in the resources and infrastructure sectors across Australia,”
McAleese said.
McAleese has
appointed financial advisers 333 Group to
provide an independent review of its financial performance.
“This review has commenced and will assist with developing
robust and sustainable plans beyond the immediate initiatives,” the company
said.