Revenue was down on the previous year's $485 million, due mainly to the wind-up of the $1.3 billion Alice Springs to Darwin railway project in which Macmahon was a 10% joint venture construction partner.
Macmahon said its earnings before interest and tax (EBIT) margin was 4.3%. A 5% target was set for the current financial year.
Chief executive officer Nick Bowen, recruited in early 2000 when the company was battling to avert a financial crisis, said all operating businesses recorded improved EBIT margins. With a reduced debt level, and a strong civil construction outlook - on the back of the Federal Government's $11.8 billion AusLink plan and increased private sector investment – as well as surging resource-sector investment, Macmahon had significant opportunities to grow profits over the next five years, he said.
"Expansion in iron ore is going well above the 200 million tonnes per annum, potentially 300Mtpa, Rio (Tinto) has already invested $US1 billion and BHP (Billiton) is starting to spend there. And there is major work to be done on ports, rail duplication and new mines," Bowen said.
"Coal over in Queensland and New South Wales is booming. The coal price is spectacular at the moment.
"As for the oil and gas market in WA, with (Woodside's) LNG Train V and the Gorgon gas project (in the pipeline), there is plenty of work up there.
"In the next 12 months, our civil business will grow by at least 30%, our Allplant (equipment refurbishment and plant and labour hire) business by 100%, and we already have $450 million (either booked or under negotiation) of work at hand.
"There's lots of work out there; it's a great time for contractors."
Macmahon snared a record $862 million of new contracts and extensions in the year to June 30, ending 2003-04 with a $784 million order book.
With a range of civil construction projects expected to come online this year, Bowen expects the division to have a much strong year following its revenue dip from $227.7 million to $169.1 million last year.
Turnover should reach more than $225 million this year, and possibly go as high as $300 million in 2006, he said.
The underground mining division's revenue also fell, but it was expected to recover strongly this year to above $75 million. The opencut mining business reported increased revenue of nearly $200 million, but the EBIT margin and return on capital was still below par, Bowen said.
However, one of biggest surprises for Macmahon was the strong performance of its newly acquired Allplant business. Revenue was $18.6 million, against $5.8 million in 2003, and included $9 million of revenue to external customers and $9.6 million of internal revenue to Macmahon's operating divisions. EBIT margin was 20.9%, up from 10.9%.
Bowen said there were plans to expand the Allplant arm in the eastern states to take advantage of strong demand from Queensland's Bowen Basin coal region.
"It a great business and the only restriction on us growing it this year is having enough people to grow it," he said.
Bowen said revenue of $520 million was predicted for the current fiscal year. But could go as high as $600 million the following year.
"One of the most important things to us as we grow is we have to keep increasing the EBIT margin – we don't want to let it deteriorate," he said. "It's happened to a lot of contractors, including Macmahon in the past, that in these periods of growth everyone grabs revenue, but the bottom line margin shrinks.
"But on the level of work at the moment, I think $600 million in 2006 is not so unattainable."
