Murray & Roberts Announces an Increase in Earnings Amidst Challenging Market Conditions
25 February 2015
Johannesburg, 25 February 2015 – Murray & Roberts today announced its interim results for the six months ended 31 December 2014.
The Group recorded revenue of R15,9 billion and attributable profit of R359 million for the six months under review. Diluted continuing headline earnings per share increased to 79 cents.
The Group’s order book reduced to R37,8 billion (December 2013: R44,9 billion) mainly due to the Oil & Gas platform order book transitioning to smaller and shorter term contracts and fewer new projects secured in the Infrastructure & Building and Energy & Industrial platforms. However, an additional R2 billion in near orders was awarded in the Infrastructure & Building platform, subsequent to the period under review.
Henry Laas, Group Chief Executive comments, “The Group announced an increase in continuing attributable earnings, compared to the previous corresponding reporting period, amidst difficult market conditions. Operational excellence to optimise project profitability, is a Group-wide focus.”
The global oil and gas sector has entered a turbulent period, following a declining oil price at the end of the reporting period. Considering the current challenging operating environment, the Oil & Gas platform recorded an acceptable FY15H1 financial result. Revenue and operating profit reduced to R6,8 billion (December 2013: R9,6 billion) and R446 million (December 2013: R468 million) respectively. The order book decreased to R12,2 billion (December 2013: R20,4 billion). However, the operating margin increased to 7% (December 2013: 5%). This margin improvement reflects a shift towards higher margin engineering and commissioning projects, a focus on operational excellence and the benefit from on-going cost efficiency programmes. The platform has near orders of R1,6 billion and a pipeline (top 10 target projects) of R33,6 billion. The market is expected to improve in the medium term. Gas will continue to be a growth sector globally, with investment shifting from Australia to new basins including Africa and North America.
Although greenfields capital expenditure in the mining sector remains at low levels, the anticipated growth in the Underground Mining platform is reflected in a stronger order book. Revenues remained relatively flat at R3,5 billion (December 2013: R3,4 billion) and operating profit decreased to R84 million (December 2013: R93 million). The order book strengthened to R13,8 billion (December 2013: R9,5 billion). The platform has near orders of R9,4 billion and a pipeline of R30,9 billion. In the medium term, an upturn in the global underground mining sector is expected. Most key commodities are represented in the current portfolio of projects, and significant opportunities for organic growth exist when mining activity picks up. Markets in Africa, Australia and the Americas are showing signs of growth. Several substantial prospects are being pursued in Botswana and Ghana.
Energy & Industrial platform revenues remained stable at R2,2 billion (December 2013: R2,3 billion), whilst an operating loss of R21 million (December 2013: R47 million operating profit) was recorded. The decrease in earnings, outside the power programme, is primarily due to development costs incurred on long-lead contract opportunities, as well as an increase in the cost to complete a project in Namibia. The order book reduced to R5,4 billion (December 2013: R6,2 billion). The platform has near orders of R0,4 billion and a pipeline of R9,3 billion. Operations and maintenance opportunities exist in the petrochemical, minerals handling and processing sectors and maintenance opportunities in the power sector. The platform is also well positioned for opportunities in the renewable power sector.
The Infrastructure & Building platform remained profitable in a challenging local infrastructure and building market. Revenues decreased marginally to R3,5 billion (December 2013: R3,6 billion), while operating profit decreased to R66 million (December 2013: R101 million) due to a reduced fair value adjustment on the Bombela Concession. Core construction operations delivered a marginal improvement in profitability. The order book decreased to R6,4 billion (December 2013: R8,6 billion). The platform has near orders of R3,6 billion (of which R2 billion was awarded subsequent to the period under review) and a pipeline of R29,1 billion, including selected opportunities in the Middle East. The South African construction market remains depressed and spending on new infrastructure halved in 2014 compared to 2013, largely due to reduced Government spending. Included in the near orders is a residential development east of Pretoria, with a potential project value in excess of R1 billion. Several building opportunities in Africa are being developed with a South African blue chip financial services firm and renewable energy opportunities are being pursued in Ghana.
“The Group is pleased with its progress and achievements over the past three Recovery & Growth years, and it is well positioned in the natural resources market sectors, which, although cyclical, present strong long term growth potential. However, the current operating environment remains challenging, not only for Murray & Roberts but for the entire engineering and construction sector, both in South Africa and further afield. It remains the Group’s strategic intent to expand its operations more into the engineering and maintenance segments of the project value chain that will deliver greater value, through offering more complete project solutions to clients,” concludes Laas.
*Please note that this media statement contains extracts from the full interim financial results for the six months ended 31 December 2014 and should be read in conjunction with the full interim financial results available on www.murrob.com.
For further information contact:
Group Communications Executive
Mobile +27 83 357 6282
Murray & Roberts Client Service
Tel: +27 (0)11 456 1144
Fax: +27 (0)86 637 0113
This media statement includes certain various “forward-looking statements” within the meaning of Section 27A of the US Securities Act 10 1933 and Section 21 E of the Securities Exchange Act of 1934 that reflect the current views or expectations of the Board with respect to future events and financial and operational performance. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, including, without limitation, those concerning: the Group’s strategy; the economic outlook for the industry and the Group’s liquidity and capital resources and expenditure. These forward-looking statements speak only as of the date of this media statement and are not based on historical facts, but rather reflect the Group’s current expectations concerning future results and events and generally may be identified by the use of forward-looking words or phrases such as “believe”, “expect”, “anticipate”, “intend”, “should”, “planned”, “may”, “potential” or similar words and phrases. The Group undertakes no obligation to update publicly or release any revisions to these forward looking statements to reflect events or circumstances after the date of this media statement or to reflect the occurrence of any unexpected events.
Neither the content of the Group’s website, nor any website accessible by hyperlinks on the Group’s website is incorporated in, or forms part of, this media statement.
About Murray & Roberts
Murray & Roberts is a leading South African engineering, contracting and construction services company. It has created employment, developed skills, applied technology and delivered infrastructure since 1902.
The company offers civil, mechanical, electrical, mining and process engineering; general building, construction and infrastructure development services in the global underground mining market and selected emerging markets in the natural resources and infrastructure sectors.
The company operates in Southern Africa, Middle East, Southeast Asia, Australasia and North and South America. The company is based in Johannesburg South Africa, where it has a public listing on the JSE Limited.
Murray & Roberts is a group of world-class companies and brands aligned to the same purpose and vision, and guided by the same set of values.
More information is available at www.murrob.com