Mader scales back global operations, expects revenue hit

Mining services company Mader Group has taken the decision to withdraw all personnel from its overseas operations, with the US the only exception.

Rather than laying-off staff it intends to reposition these workers within its Australian operation.

While for the time being its Australian operation is functioning as usual - albeit with special measures being formulated to weather the COVID-19 pandemic - the company has announced an expected annual reduction in revenue of around 5 per cent. 

In line with this prediction and precipitated by the uncertainty of how the mining sector will cope with government-enforced directives, Mader’s board today signalled the withdrawal of its FY20 guidance of $19.3 million of adjusted NPAT.

It will provide full guidance once the impact of COVID-19 precautions on its total operations becomes clear.

Mader has small contingents operating in Zambia and has undertaken sporadic contracting across South America and South-East Asia. It entered the US market about 18 months ago, based in Fort Collins, Colorado.

The company has several major contracts and support functions in eight US states with maintenance works extending across all major original equipment manufacturers (OEMs), including Caterpillar, Atlas Copco, Hitachi and Komatsu.

In contrast to its Australian business, Mader cites its lack of client diversification as leaving it more exposed than its competitors in the North American market. 

Given the US is now the hardest hit country in the world in terms of the infectious spread of COVID-19, it is unclear what effects that will have on Mader's ultimate profitability in that territory. 

Back in Australia, with intra- and interstate travel both being compromised by the state government's forced border closures, the next few weeks will be critical in determining long-term arrangements for travel to worksites and overall staff welfare.