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Monadelphous said its Engineering Construction division had experienced supply chain issues, causing delays on large resources construction projects currently in progress, as well as a number of temporary deferrals to potential construction contract award dates.
In its Maintenance division, the company has experienced a reduction in activity levels, particularly in fly-in fly-out operations with customers reducing non-essential work, delaying discretionary maintenance expenditure and deferring shutdowns.
Monadelphous said it was unable to provide revenue guidance for FY20, after withdrawing guidance of more than A$1.7 billion in revenue in March.
The company said if the activity levels the company was experiencing continued until the end of June, it would expect revenue to be similar to the $1.6 billion achieved in FY19.
However, it warned margins in the current half would be "significantly challenged".
Monadelphous is also restructuring its Water Infrastructure business. Several of that business' projects have experienced an escalation in contract disputes and what Monadelphous calls disappointing levels of profitability.
That has led Monadelphous to discontinue the business' operations in New Zealand and consolidate its east coast engineering construction operations into a single eastern Australian business unit.
According to the company the restructure will let it reduce costs and focus on improving the quality of its earnings from the water sector.
Monadelphous is making a $14 million before tax provision for the Water Infrastructure business for the 2019-20 financial year for underperformance and restructuring costs.
The company has implemented a targeted cost reduction plan across its business and as part of that Mondelphous chairman John Rubino, managing director Rob Velletri and the company's non-executive directors have agreed to a 30% reduction in salary and fees for the next six months.
The executive and general management teams have also agreed to 10%-20% pay cuts over the same period.
Monadelphous managing director Rob Velletri said the company would continue to work closely with its customers during these challenging and uncertain times.
He said he was confident the company was well positioned to deal with the challenges ahead and capitalise on the opportunities that would arise in time.
The company has not said whether its cost reduction and restructuring efforts will result in any job losses.
Monadelphous is not the first engineering and services company to find itself in this predicament and likely will not be the last.
Last month Worley Parsons announced it was cutting 3000 staff as a result of business disruptions caused by the COVID-19 crisis.
Shares in Monadephous slumped 14.6% on Friday to $9.65, valuing the company at $911.8 million.
