Murray & Roberts‚ one of SA’s biggest construction and engineering groups‚ has stayed on trend with the beleaguered civil engineering industry‚ reporting dismal results for the six months to December.
Profit for the period fell to R369-million from R863-million last year as headline earnings per share (HEPS) from continuing and discontinued operations stayed flat.
Dire local market conditions are evidenced by the fact that 93% of profits come from outside SA at the HEPS before interest and tax level‚ along with 65% of revenue.
Chief executive Henry Laas said the company had never had such a high proportion of earnings coming from outside the domestic market.
This comes as labour unrest‚ big delays on some major local construction projects‚ and poor economic growth have crushed the domestic industry.
To battle this‚ the group has undergone a three-year restructuring process to focus on oil and gas‚ underground mining‚ energy and industrial projects, and infrastructure and building.
The group’s order book fell to R37.8-billion from R44.9-billion a year ago‚ mainly because of the changes to its oil and gas unit‚ which moved to smaller and shorter-term contracts‚ and a drop in new projects as a result of the oil price spike.
In addition‚ fewer contracts were secured in two other units; infrastructure and building‚ and energy and industrial.
Murray & Roberts has been in the news a lot in recent years‚ both for its commercial struggles since SA’s hosting of the 2010 Soccer World Cup and its prominence in the Competition Commission’s fast-track process over industry collusion.
It also comes as the City of Cape Town lodges a R429-million civil damages claim against WBHO‚ the group’s partner in the building of the Cape Town Stadium ahead of the soccer extravaganza.
But both the city and Murray & Roberts said there were no claims against the group. Instead‚ Cape Town executive deputy mayor and mayoral committee member for finance Ian Neilson said on Wednesday that a summons was issued out of the high court on December 5 last year against WBHO‚ Stefanutti Stocks and SA’s largest construction group by turnover‚ Aveng.
Laas said Murray & Roberts had no “open items” in relation to the Competition Commission’s fast-track process against collusion in the industry. “We have received no civil claims and are not implicated in the Cape Town Stadium.”
Nedbank Capital said early this year that spending on new infrastructure halved last year compared with 2013. This was reflected in the earnings of Murray & Roberts’ peer‚ Group Five‚ which saw core operating profit plunge 35.5% in its interim results to December last year.
Aveng revenue fell 14% as net operating earnings dropped 19% and headline earnings per share plummeted 58% in the six months to December.
The group said it was feeling pressure from a fall in mining investment and the poor roll-out of government infrastructure.
It also, like others, had major outstanding claims to deal with on an Australian natural gas project.
Group Five said its civil engineering business was the problem. Apart from poor state infrastructure spend in SA‚ it has had difficulty with other projects in the country and the rest of Africa.
The resulting lack of work meant fierce competition and razor-thin margins.
This has led South African construction companies to seek work in Africa‚ Australia and Southeast Asia. But Australia is also suffering from the rout of commodities prices‚ including oil.
Attention there has since turned to civil infrastructure projects‚ but gains for construction contractors will not happen overnight. — BDLive
Torrid HEPS for Murray & Roberts
Profit for the period fell to R369-million from R863-million last year as headline earnings per share (HEPS) from continuing and discontinued operations stayed flat.
Dire local market conditions are evidenced by the fact that 93% of profits come from outside SA at the HEPS before interest and tax level‚ along with 65% of revenue.
Chief executive Henry Laas said the company had never had such a high proportion of earnings coming from outside the domestic market.
This comes as labour unrest‚ big delays on some major local construction projects‚ and poor economic growth have crushed the domestic industry.
To battle this‚ the group has undergone a three-year restructuring process to focus on oil and gas‚ underground mining‚ energy and industrial projects, and infrastructure and building.
The group’s order book fell to R37.8-billion from R44.9-billion a year ago‚ mainly because of the changes to its oil and gas unit‚ which moved to smaller and shorter-term contracts‚ and a drop in new projects as a result of the oil price spike.
In addition‚ fewer contracts were secured in two other units; infrastructure and building‚ and energy and industrial.
Murray & Roberts has been in the news a lot in recent years‚ both for its commercial struggles since SA’s hosting of the 2010 Soccer World Cup and its prominence in the Competition Commission’s fast-track process over industry collusion.
It also comes as the City of Cape Town lodges a R429-million civil damages claim against WBHO‚ the group’s partner in the building of the Cape Town Stadium ahead of the soccer extravaganza.
But both the city and Murray & Roberts said there were no claims against the group. Instead‚ Cape Town executive deputy mayor and mayoral committee member for finance Ian Neilson said on Wednesday that a summons was issued out of the high court on December 5 last year against WBHO‚ Stefanutti Stocks and SA’s largest construction group by turnover‚ Aveng.
Laas said Murray & Roberts had no “open items” in relation to the Competition Commission’s fast-track process against collusion in the industry. “We have received no civil claims and are not implicated in the Cape Town Stadium.”
Nedbank Capital said early this year that spending on new infrastructure halved last year compared with 2013. This was reflected in the earnings of Murray & Roberts’ peer‚ Group Five‚ which saw core operating profit plunge 35.5% in its interim results to December last year.
Aveng revenue fell 14% as net operating earnings dropped 19% and headline earnings per share plummeted 58% in the six months to December.
The group said it was feeling pressure from a fall in mining investment and the poor roll-out of government infrastructure.
It also, like others, had major outstanding claims to deal with on an Australian natural gas project.
Group Five said its civil engineering business was the problem. Apart from poor state infrastructure spend in SA‚ it has had difficulty with other projects in the country and the rest of Africa.
The resulting lack of work meant fierce competition and razor-thin margins.
This has led South African construction companies to seek work in Africa‚ Australia and Southeast Asia. But Australia is also suffering from the rout of commodities prices‚ including oil.
Attention there has since turned to civil infrastructure projects‚ but gains for construction contractors will not happen overnight. — BDLive
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