Coffey, a mining consultancy group, has cut its earnings forecast for 2013 and announced plans to cut jobs after an alarming spike in project delays and cancellations from the resources industry.
In a market update today Coffey said it expected second half earnings to be significantly lower than its first half performance.
The company previously forecast earnings at least in line with the $23.7 million it earned in the first half.
Coffey said falling commodity prices, the high dollar, and an uncertain political environment had created “deteriorating market conditions” in Australia, and around 150 redundancies were being implemented to stem the losses.
“The softening market conditions have impacted the Australian Geosciences and Project Management businesses. Although our offshore geosciences businesses are similarly exposed to lower commodity prices, the cost pressures on offshore projects are less pronounced. Some regions such as Christchurch, Calgary and Toronto remain buoyant,” the company said.
“We began seeing the impact of these project delays on our geosciences revenue in Q3 FY2013. Geosciences fee revenues for the March quarter of $59.5m were four per cent lower than the previous corresponding quarter, which was not a strong quarter.”
Coffey said in the past six weeks 54 contracts had been delayed or cancelled, and it released an alarming graph showing the rise in cancellations and delays for its geosciences business.
“These delays were initially mostly in the mining sector, and are now across a range of sectors including infrastructure and oil and gas,” the company said.
Along with the redundancies Coffey said it was implementing a number of cost cutting measures, and the restructuring was expected to cost $7m-$8m in Q4 FY2013.
The company said it has been able to redeploy some workers to its more profitable overseas operations, and flexible contracts would be introduced for other employees.
Along with cuts to its operating costs Coffey also said measures to reduce its debt remained a priority.