UPDATE 3-Australian mining pullback hits Macmahon, shares dive

* Macmahon sees annual profit falling to between A$20-40 mln

* Blames problems at Rio Tinto rail project

* Says stretched too thin by mining boom

* Shares plunge as much as 48 pct to 8-year low (Adds top shareholder comment, updates shares)

By Sonali Paul

MELBOURNE, Sept 19 (Reuters) - Australian mine construction firm Macmahon Holdings Ltd warned its profit would fall as much as 64 percent this year due to weaker mining demand and a troubled contract, briefly wiping out nearly half the value of its shares.

The company's chief executive, Nick Bowen, also quit on Wednesday after more than 12 years at the helm, taking the fall for the firm's second big hiccup in two years.

Macmahon took longer than some rivals to admit the tide had turned on Australia's resources boom, as miners from BHP Billiton down to the smallest players have been hit by rising costs, falling demand from China and a strong Australian dollar.

The profit warning came just a month after it said it was expecting profit to grow 20 percent in the year to June 2013.

"I thought they were too bullish a month ago, but they've obviously hit reality," said Scott Murdoch, an analyst at broker RBS Morgans.

Macmahon, which is also a mining contractor, said it now expects full-year profit after tax will be between A$20 million and A$40 million, down from its forecast last month that profit would grow by 20 percent to around A$67 million ($69.99 million).

The company said it had shot itself in the foot by taking on too much work in Western Australia, a hotbed of A$197 billion ($206 billion) worth of mining and gas projects that have been hurt by shortages of skilled labour and tight equipment supplies.

"No doubt, the whole industry's been stretched, particularly in Western Australia (WA), where you've had the iron ore booming and also the LNG," Macmahon's new chief executive, Ross Carroll, told analysts and reporters on a conference call.

"Our WA business here, in particular, grew too strongly, and in the end we couldn't handle it," he said.

The company said it expects to break even or report a small loss in the first half, hit by rising costs to complete an iron ore rail project it is working on for Rio Tinto , just a month after reporting a record profit.

PROJECT DELAYS

Macmahon also said it has been hurt by delays on the Roy Hill iron ore mine being developed by Australia's richest person, Gina Rinehart, and delays in work on the Abbot Point coal terminal in Queensland.

The cost blowouts on the Rio Tinto project are similar to problems Macmahon had two years ago with iron ore rail work it did for BHP Billiton's Rapid Growth Project 5.

"Investors were just regaining a little bit of confidence post-RGP 5 and this will reverse that," said Murdoch of RBS Morgans.

Macmahon shares, 19 percent owned by rival and top shareholder Leighton Holdings, slid 48 percent to an eight-year low of A$0.275, after coming off a two-day trading halt. They last traded down 41 percent at A$0.315.

"We are very disappointed with the downgrade news from Macmahon, however we remain a supportive shareholder," a Leighton spokesman said in a comment emailed to Reuters.

Carroll, formerly head of the group's mining arm and chief financial officer before that, was appointed CEO to replace Bowen.

Bowen said he resigned of his own accord because he was ultimately responsible for the profit-forecast downgrade.

"The decision is mine and mine alone," he said in a statement, adding that he remained a top-10 shareholder of the company, owning a 3.2 percent stake.

Other drilling and mining services firms that have been hit by mining project delays and mine production cuts over the past month include Boart Longyear, NRW Holdings, Calibre Group, Emeco Holdings and Ausdrill .

CEO Carroll said the company would look to cut costs, which may involve job cuts, as it deals with tougher negotiations with its mining clients, who have already started cutting what they are willing to pay on contracts.

"We're already feeling that through our contract extensions. It's something we're prepared for," he said. ($1 = 0.9573 Australian dollars) (Editing by Chris Gallagher and Muralikumar Anantharaman)