Engineering company Monadelphous Group says both its Engineering Construction and Maintenance divisions have been hit by measures to curb the spread of the COVID-19 virus.
In reaction to this, it said its Chairman, Managing Director and Non-Executive Directors had agreed to a 30% reduction in salary and fees for the next six months, while the Executive and General Management teams would take 10-20% salary cuts over the same period.
In a market update issued last week, Monadelphous said COVID-19 operational impact measures taken by governments and industry across the world to prevent further spread of the virus had impacted the economy, resulting in the delay, suspension, deferral or reduction of services across a range of the company’s projects and worksites, as well as materially disrupting productivity levels.
“Monadelphous continues to take all necessary measures required to proactively manage the business through this unprecedented period to ensure the safety of its employees and sustain business continuity,” it said.
In the Engineering Construction division, which recently secured major contracts on BHP’s South Flank, Rio Tinto’s West Angelas (pictured) and Albemarle Lithium’s Kemerton projects, Monadelphous said it had experienced supply chain issues causing delays on large resources construction projects currently in progress. It had also witnessed several temporary deferrals to potential new construction contract award dates.
In its maintenance division, the company has experienced a material reduction in activity levels, particularly in fly-in-fly-out operations with customers reducing non-essential work, delaying discretionary maintenance spend and deferring shutdowns, it said.
On top of this, and following several water projects approaching completion recently experiencing an escalation in contract disputes and “disappointing levels” of profitability, Monadelphous said it planned to discontinue its Water Infrastructure business operations in New Zealand, plus consolidate its east coast engineering construction operations into a single Eastern Australian business unit. This followed a strategic and operational review of the business in Australia and New Zealand.
Rob Velletri, Monadelphous Managing Director, said: “We will continue to work closely with our customers during these challenging and uncertain times. Our disciplined and prudent management, loyal workforce and strong balance sheet mean that we are well positioned to deal with the challenges ahead, and the opportunities that will arise in time. I am confident that the actions we have taken to refocus the Water Infrastructure business will deliver more profitable and sustainable pipeline of opportunities over the longer term.”