Murray & Roberts struck an optimistic tone on Wednesday, saying it is about to enter a strong earnings growth trajectory that could last years as diversification efforts by the former construction heavyweight start to pay off after swinging back to profitability.
The company, led by CEO Henry Laas, returned to profit with R63m in headline earnings, or 16 cents a share, in the year to the end of June from a loss of R349m a year earlier. Headline earnings is the primary measure of profit that excludes one-off, non-trading items to give a fuller picture of a company’s underlying performance.
Murray & Roberts is one of the last few firms standing after an industrywide slump that forced rivals like Group Five and Basil Read to tumble into bankruptcy protection, or business rescue, which exposed the construction industry’s dependence on the SA economy — which has hardly grown since the pre-2010 World Cup building boom.
But Murray & Roberts, which is now an engineering and mining contractor, has been looking for business elsewhere in the world, snapping up contracts in Australia, Southeast Asia, North America and on the continent to offset slow growth at home as both the public and private sector cut or delayed infrastructure spending.
Its order book swelled from R54.2bn at end-June 2020 to nearly R61bn in the financial year as projects stacked up in the energy, mining and water sector. In addition, Murray & Roberts could soon add R11.1bn to the project pipeline as it has been picked as a preferred bidder.
“The group is on the cusp of a multiyear period of strong earnings growth,” Murray & Roberts said in a statement. “The group is confident that it has the leadership, financial and resource capacity to deliver on its aspirations.”
The company reported a 4% rise in annual revenue to R21.9bn, of which more than 80% is earned outside SA — a home market that has made private sector-led investments in infrastructure the cornerstone of President Cyril Ramaphosa’s economic revival plan.
Despite constant warnings from officials in Ramaphosa’s Presidential Infrastructure Commission Council (PICC) to fast-track projects valued at R340bn, Murray & Roberts said investments in water infrastructure — which is high on the PICC’s priority list — has remained limited.
“The uncertain timing of potential project awards necessitated a further reduction of overhead costs in anticipation of lower revenue,” the company said. “The restructuring was undertaken without compromising the platform’s capacity to pursue our strategic objectives and respond to prospects as and when they present in its target markets.”
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