Monadelphous flags revenue drop

Engineering group warns market conditions are squeezing margins.

Monadelphous Group (MND) has warned its revenue will not be as high in fiscal 2014 as the prior year as market conditions tighten.

Addressing shareholders at the group's annual general meeting, managing director Rob Velletri said he expected a year of consolidation after an abnormal surge in revenue of more than 80% over the past two years.

Customers have reassessed capital expenditure plans and focused on optimising asset performance and reducing costs, he said.

"With margins under pressure from a more competitive environment, the company continues to focus on efficiency improvements and cost reductions," Mr Velletri said. 

He said a restructure is boosting productivity and the group has already reduced costs by approximately $15 million a year.

Future construction opportunities will come from iron ore, oil and gas resource developments, particularly LNG projects, he said, adding the maintenance service market remains robust.

Revenue levels in the first half are likely to be similar to the previous corresponding period and are set to soften in the second half, he said.

Mr Velletri said the company's diversification strategy will support long-term growth.

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