However, Henry Laas, the group chief executive of the listed multinational engineering and construction group that focuses on the oil and gas, underground mining and water and power sectors, confirmed the group needed to take R60million in costs out of its power and water business, which would result in retrenchments.
Laas said they had to align the cost base of the power and water business, because its financial results continued to be underpinned by Eskom’s Medupi and Kusile power station projects.
He said work by the group on Medupi and Kusile was expected to be completed towards the end of this calendar year.
Laas said the power sector presented few opportunities because all new power station projects have been delayed, and there were no other large opportunities in the short to medium term.
Daniel Grobler, the group financial director at M&R, said the total power and water platform order book had fallen to R2.7bn in December from R5.8bn a year earlier, purely as a result of the Medupi and Kusile power programme coming to an end.
“There is a need to lift the profit needle [in the power and water platform]. We need to have a sustainable overhead structure after Medupi and Kusile are out of the system,” he said.
Laas said M&R had about 6000 people working in its power and water platform, but would be demobilising about 1000 people this month at Medupi and Kusile.
He said the people who would be affected by the retrenchments were largely at head office and regional office level.
Laas was unable to disclose any further details about the two underground mining contracts in the US.
But he confirmed they were making good progress with an acquisition target in the oil and gas sector in the US, and hoped to conclude the acquisition by the end of M&R’s financial year in June.
He said the value of the acquisition was not material.
Laas said the company that it hoped to acquire would start contributing to group revenue and profit in the next financial year, because it was a going concern, had its own order book and was executing projects.
M&R expected that, if the acquisition were concluded, it would contribute about $5m (R59m) in profit before tax in the early stages, and they would grow it from there, he said.
Shares in Murray & Roberts fell 2.14percent yesterday to close at R10.53.
- BUSINESS REPORT