Murray & Roberts massively reduced its attributable loss to R95 million in the six months to December 31, off a smaller business, from a R2.53 billion loss at the same time last year, and it has also drastically cut debt.
The lower loss, debt and other changes at the group likely met with investor favour, as the share price surged 7.4% by late yesterday afternoon to R1.30.
The order book stood at R14.7bn versus R16.1bn last year. Net debt fell to R247m from R1.97bn.
The group, once one of South Africa’s biggest construction and engineering groups, has become much smaller since the voluntary administration of its Australian subsidiaries in December 2022, which followed the devastating impact of Covid-19 on the Clough Limited subsidiary.
Today, Murray & Roberts is an engineering and contracting services company focused on the Africa and America’s underground mining markets, and the renewable energy and power infrastructure markets in Sub-Saharan Africa.
The mining businesses generate most of its revenue and earnings, and are diversified across the northern and southern hemispheres, trading under the Cementation brand.
“Considering the group’s reduced earnings base, it faced a significant challenge in servicing debt in South Africa and therefore had to agree a time-scaled deleveraging plan to settle all of its debt with a consortium of South African banks…the group has made meaningful progress with its deleveraging plan,” directors said in the results yesterday.
Revenue from continuing operations during the six months increased to R6.6bn from R5.9bn. Earnings before interest and tax from continuing operations increased to R103m from R89m.
The diluted headline loss per share from continuing operations of 16 cents was much reduced from the 27 cents loss at the same time last year.
“The mining business has been the main contributor to earnings for the last decade. This business features excellent assets, retains its position as a leading mining services provider in Africa and the Americas and is expected to continue to sustainably deliver meaningful earnings into the future,” the group said.
Cementation APAC would be capacitated to service the Asia-Pacific mining region, post completion of the refinancing of its debt in South Africa.
The group said South Africa's constrained energy, transmission and distribution infrastructure required urgent investment to support additional capacity, which presented longer-term prospects for OptiPower.
New initiatives with financial institutions to establish a stable capital structure were progressing well. “As agreed with the current South African banks, the objective was to conclude the debt refinancing process in South Africa by June 2024,” directors said.
Due to the changes in the business over the past two years, the organisational structure had been rationalised and would no longer be structured around ‘business platforms’, but around four operating companies.
These are OptiPower, focused on Sub-Saharan Africa; Murray & Roberts Cementation, which is focused on Africa; Cementation Americas, which is focused on the Americas; and TNT Inc, which is also focused on the Americas. As part of various cost reduction initiatives, headcount and office space at the corporate office in Johannesburg would be reduced by 40% respectively.
TNT Inc, or Terra Nova Technologies provides materials handling design and services, consulting services, and general contracting to the mining and minerals processing industries.
BUSINESS REPORT