Willie Meyburgh, chief executive of Stefanutti Stocks, said yesterday that the group was forced to proactively rightsize the business and expected a further reduction in the headcount in the next few years.
Meyburgh’s comments follow the Construction Industry Development Board this week reporting that the industry shed 140000 jobs between the first and second quarters of this year and the job losses by the industry total about 240000 jobs this calendar year.
Meyburgh said trading conditions remained extremely challenging and, although there were opportunities, they were fiercely contested.
He said Stefanutti Stocks's order book at end-August was R13.9billion, which was almost the same when the group reported its annual financial results in May this year.
“Even in this difficult environment, when work takes a long time to get to the market, we find the drawings are all available and the documents have been prepared, but it is just not getting to tender stage in the private and public stage,” he said.
However, Meyburgh said mining houses were putting out more work for tender for mining infrastructure and there were extremely good opportunities for open-pit mining.
On the infrastructure side, roads and bridges, marine and water and sanitation continued to offer opportunities for the group.
Meyburgh said the work prospects for Stefanutti Stocks for the next 24 months totalled R65bn, of which 38percent represented cross-border work, but this had reduced from more than R100bn over the past four years.
“It’s not that the opportunities are not there," he said.
"It’s just that it takes so damn long to come to the market place, which is really what's causing pressure on our business.”
Meyburgh said Stefanutti Stocks still managed to improve its operating profit in the six months to August, despite the shortage of infrastructure work and the ongoing challenging trading environment.
Stefanutti Stocks yesterday reported an 18percent improvement in operating profit to R118.6m from R100.3m, while the operating profit margin remained consistent at 2.3percent.
Contract revenue from operations increased by the same percentage to R5.2bn from R4.4bn. Headline earnings a share declined by 15percent to 44.81cents from 52.73c.
No dividend was declared. Cash on hand improved to R1.26bn from R1bn. But Meyburgh said that the group still had a problem with slow payments from the governments of Zambia, Nigeria, Mozambique and in South Africa, especially from the human settlement department.
Meyburgh said the total amount outstanding was just above R700m, which was not in dispute. He added that one of the group’s clients in the oil and gas division had cancelled an R800m two-year contract in December, which had impacted on the division’s turnover and operating profit.
Shares in Stefanutti Stocks dropped 1.69percent yesterday on the JSE to close at R2.90.
- BUSINESS REPORT