A new growth plan approved by the board of Murray & Roberts (M&R) has identified the mining and minerals and oil and gas segments as areas with significant growth potential and growth opportunities for the company – with expansion into Africa as a key element.
Henry Laas, the chief executive of the listed construction and engineering group, said yesterday that expansion into the rest of Africa was important to the group and an office in Ghana, the group’s hub for west Africa, would be officially opened next month.
He added: “We will work from Ghana into the neighbouring countries.”
Laas said a further M&R representative office would be established in the current financial year in Zambia, which would be the group’s hub for central Africa.
He said the group had also identified Kenya as a hub for east Africa, but did not plan to establish a permanent presence there in this financial year.
“We are cautious about Africa, but we see the opportunity there. We don’t want to run into Africa, but want to be strategic and be selective in the way we engage the market.”
Laas said a lot of international mining houses were active in central and west Africa and these firms would be the initial client base for the group in these regions.
He said M&R’s recovery and growth plan stretched over a three-year horizon and had three phases. The recovery phase ended in June this year.
One of the objectives in the recovery phase was to develop a growth strategy, which had now been approved by the board and would be implemented over the next two financial years. “We are aiming to return to profitability and aiming to resume dividend payments in this period.”
Laas stressed that the growth plan did not signify that M&R was expecting a remarkable recovery in the construction sector in the short term, nor that the markets would become very strong and the group, as a consequence of this, would grow phenomenally.
At the core of this plan was a strategic decision that M&R needed to return to its core competency of construction and engineering, he said, admitting that the group’s businesses would have to be realigned to implement the plan.
As a consequence of this realignment, Laas believed the offshore revenue base would increase and shift over time.
The percentage split in the group’s R45.3 billion order book at end-June was 60/40 in favour of international business versus Southern African Development Community business.
He emphasised that M&R’s mining business was global and these businesses in the Americas and Australia were outgrowing its South African mining business.
He highlighted that Clough Australia had grown its order book phenomenally as a consequence of mining and oil and gas opportunities, by R8bn to R19.4bn at the end of June, from R11.4bn in June last year.
He said phase three of the growth strategy involved developing “a new strategic future for M&R”, which would be done over the next two-year period.
On Wednesday M&R reported a reduced diluted headline loss a share of R2.46 in the year to June from the R4.54 loss it posted in the previous year. The attributable loss declined to R736 million from the R1.74bn loss the previous year.
The losses reported were after accounting for the R1.19bn loss on the contract completion costs for the Gorgon Pioneer material offloading facility in Australia and a R454m loss in the Middle East.
The share price dropped 2.75 percent to R21.20 on the JSE yesterday.