Building services provider Johns Lyng Group has cut costs to address “challenging” conditions and has reduced its earnings outlook after a weak first half.

The listed company reported today that revenue for the six months to December dropped to $573.1 million from $610.6 million a year earlier.

The decline included a sharp drop in catastrophe revenue to $38.8 million from $120.4 million. Catastrophe revenue is contracted work in hand from recent events.

The core insurance building and restoration services division’s revenue fell to $531.8 million from $554.5 million. The division provides catastrophe rebuilding services for insurer clients and governments. It also has contracts with insurers to provide restoration services for business-as-usual insured events.

Johns Lyng says challenges included benign weather conditions and a lower volume of insurance claims. Another issue related to recovery work in the NSW northern region, where ramp-up has progressed more slowly than expected – about six months behind schedule.

The company says it has taken “mitigating action” to reinvigorate its sales strategy and client focus, and has moved to cut expenses.

“The group has conducted a detailed review and implemented a cost-reduction program to recalibrate its overhead base and maintain financial discipline as conditions evolve.

“[Johns Lyng Group] is confident it has taken appropriate measures to mitigate the short-term challenges it has faced during [the first half] while remaining firmly focused on delivering both near-term performance and long-term sustainable growth for shareholders.”

The company now expects group earnings before interest, tax, depreciation and amortisation of $126.5 million, down 4.5% on its previous guidance. Its revised sales guidance is 5% lower, at $1.167 billion.

First-half group EBITDA fell to $54.2 million from $63.9 million.

Johns Lyng shares tumbled in intra-day trading after the earnings release and downgrade. Its stock closed 33.4% lower at $2.53 after skidding to a low of $2.36 today.

CEO and MD Scott Didier says the business “enters the second half with a strong foundation to navigate near-term challenges and sustain its established growth trajectory. Our expanded insurer partnerships, strategic acquisitions and ongoing integration efforts position us for sustained growth across our strategic pillars.”

Johns Lyng says first-half highlights included contract extensions with insurer clients Suncorp and Hollard.

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