- Engineering firm Monadelphous (MND) has posted an update on how COVID-19 has affected the business’ performance
- The company’s engineering division is experiencing significant supply chain issues
- Due to this, the company is delaying, suspending, deferring or reducing a number of services across a range of the company’s products
- The company has said productivity levels have been materially affected, especially in major resource projects as miners have cut spending to non-essential services
- Monadelphous shares are down 4.66 per cent on the market on Monday, trading for $9.20 per share
Monadelphous (MND) says COVID-19 has pinched the company significantly, following an announcement in March that they would pull financial guidance.
The company has stated that measures taken by governments and industry across the globe to stop the spread of the coronavirus pandemic have resulted in “the delay, suspension, deferral or reduction of services across a range of the company’s projects and worksites.”
The company stated the grim news had been particularly bad in its engineering construction division, which had intensive difficulty in securing its supply chain that had, in turn, delayed several large resource construction projects. This division has also had a number of temporary deferrals to potential new construction contract award dates, further clouding its workload over the next few weeks and months.
In Monadelphous’ maintenance division, the company has experienced a significant reduction in work, particularly from fly-in, fly-out maintenance expenditure and the deferral of mine shutdown work, as mineral companies defer virtually all non-essential spending during the pandemic.
The company has stated that the “short to medium-term financial performance of the business is, and will remain, dependent on the extent and duration of the impact to the operational activity and productivity levels due to the COVID-19 outbreak.”
As if things couldn’t get any worse for the engineering firm, the company has also announced they have several water infrastructure projects that are currently mired in contract disputes, along with disappointing levels of profitability.
The company has discontinued its water infrastructure business in New Zealand and will consolidate its east coast engineering construction operations into a single Eastern Australian business unit. This is expected to cost Monadelphous $14 million.
Monadelphous shares are down 4.66 per cent on the market on Monday, trading for $9.20 per share.