Contractors withdraw guidance

MINING services providers Downer EDI and Monadelphous Group have withdrawn full-year guidance due to COVID-19.
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Downer had previously flagged earnings of A$300 million this financial year, while Monadelphous told the market last month it was expecting 10% growth over FY19 revenue of $1.6 billion.

Both companies cited the uncertainty around the impacts of the coronavirus outbreak.

Downer CEO Grant Fenn said demand for the majority of the company's services was expected to remain strong.

"Our teams across the group are working very hard to ensure that our critical services are as resilient as possible in the current environment and we are working closely with our customers around planning and business continuity. We are also implementing a range of cost reduction initiatives across the group," he said.

"Downer has a very solid financial foundation and a strong pipeline of ongoing work, most of it with government customers. We are making hard decisions due to the unprecedented impact of this virus, and these decisions have been taken to position Downer for the future when the COVID-19 situation eases."

The company said it had a strong balance sheet, with A$515 million of cash at December 31 and only $50 million of debt facilities maturing in the next 12 months.

Monadelphous said it had established a dedicated team to monitor, assess and provide guidance to its business daily, taking advice from government agencies and the World Health Organisation, and working in partnership with its customers globally.

"The company is taking decisive action to proactively manage the business through this unprecedented period, to keep our personnel safe, sustain business continuity and ensure it remains well positioned for when conditions stabilise," Monadelphous managing director Rob Velletri said.

"While the situation is evolving quickly there have been no confirmed cases of COVID-19 at Monadelphous to date. We have prepared and implemented detailed protocols within our business to inform the management of potential cases within our workforce, and how we will address and respond to cases within our business. We will continue to support our customers and the communities in which we operate during this challenging time."

Smaller maintenance firm Engenco reported no material impact on the level of customer demand, but warned the general slowdown was likely to negatively impact trading results.

Shares in Mondadelphous were down 3.4% to $10.14, but the stock earlier dipped to a 52-week low of $9.52.

Downer was down 2.6% to $3.37 after hitting a 12-month low of $3.26 yesterday.

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