110 YEARS - AND BUILT TO LAST

COVER STORY

In this edition of Robust we profile the rich and proud heritage of Murray & Roberts and revisit some of the historic projects and people that have shaped it into the leading engineering, contracting and construction services company it is today.

Murray & Roberts celebrates 110 years this year – and looks back on a history which has seen two humble construction businesses in South Africa transformed over the years into a leading global organisation able to compete with the best in the world.

For 110 years, Murray & Roberts has played a leading role in the socio-economic development of South Africa and the Southern African region, and has participated in some of the world's leading engineering projects at home and abroad. It has built a legacy of landmark roads, bridges and harbours, commercial, retail and entertainment centres, industrial, manufacturing facilities and public transport infrastructure.

1915 - Murray & Stewart House in Port Elizabeth

Humble beginnings

From humble beginnings in 1902 as an emerging house builder in the Cape Colony, Murray & Roberts expanded steadily throughout Southern Africa, across all industry sectors and into many international markets, pioneering the introduction of new technologies, materials and methodologies into the domestic construction and engineering industry.

For its first 75 years, the company developed under the leadership of its founding families. Douglas Murray inherited Murray & Stewart from his father John in 1928 and co-founded The Roberts Construction Co. in 1934 with his friend and colleague Douglas Roberts. They were later joined by Andrew Roberts, and the three entrepreneurs played a leadership role in the formal development of the South African construction and engineering industry.

Where Douglas Murray followed a strategy that maintained geographic focus in the Cape, he sought growth through diversification into construction materials and services as well as the industrial sector. Douglas and Andrew Roberts, however, retained focus on the construction sector and sought growth through geographic diversification into Africa and elsewhere. This strategy difference was to weigh heavily on the performance of an eventually merged group.

Douglas Murray died in 1964 and was succeeded by long-serving executive Des Baker, who in partnership with Bill Bramwell at Roberts Construction became the architect of a merged and more industrialised Murray & Roberts over a 13-year period between 1967 and 1979. Douglas Roberts finally retired in 1979 and both brothers died in 1982. Following the premature death of Des Baker earlier that year, Bill Bramwell became executive chairman.

A giant is born

The Roberts Construction Company had converted to a public company in 1948 and was listed on the JSE Limited in 1951. Murray & Roberts was formed in 1967 following its merger with Murray & Stewart, but the two companies continued to operate as separate businesses until all operations were fully consolidated in 1979.

The 15-year period between 1980 and 1994 brought significant change to the shareholding and business make-up of Murray & Roberts. In 1984, The Murray Trusts entered a shareholder and voting pool agreement with Sanlam that controlled more than 50% of the issued shares of Murray & Roberts. By 1989, Sanlam had placed its shares into its industrial investment subsidiary Sankorp, which in turn took singular control of the company through the voting pool agreement, influencing board appointments and strategy. Over the period 1990 to 1994, numerous industrial businesses from elsewhere in the Sankorp stable were sold into Murray & Roberts, paid for through the issue of new shares.

By 1995 Sanlam had reduced its shareholding below 35%, a new executive leadership was in place and euphoria around South Africa’s new democracy including the promise offered by the Reconstruction & Development Programme, combined to drive the share to a high of 2 850 cents. Five contracting activities had reduced to less than 30% of group business with the major contributors being cement, tyres and transport.

During the period between 1996 and 2000, Murray & Roberts delivered a continuous flow of poor performance. By June 2000 almost R1,6 billion of shareholder funds (50%) had been destroyed and R9 billion of market capitalisation (90%) was lost. The 2000 financial year ended with a share price at 300 cents.

Rebuilding Murray & Roberts

Rebuilding Murray & Roberts was a strategy introduced in July 2000 by a new executive leadership team, led by Brian Bruce who was appointed group chief executive in 2000. It aimed to transform Murray & Roberts fundamentally over a five-year period to 30 June 2005, and to build a sustainable business model for earnings growth and value creation into the future.

By gaining an understanding of the future potential of the construction economies of developing economies and how each of the businesses in Murray & Roberts could access this potential, the Group was able to strengthen the core elements of its business that offered the greatest future growth prospects and invest in sectors and geographic areas that offered future potential. Non-core assets were sold, including Unitrans, and this released capital for significant strategic acquisitions, the most notable of which were the Cementation Group, Clough and Concor.

By 30 June 2005, the Murray & Roberts share price had rebounded to 1 400 cents as confidence in the construction sector and Murray & Roberts grew, and the Group had established a solid platform for future growth as a global engineering contracting business serving selected natural resource markets in Southern Africa, Middle East, Southeast Asia and North America. It was also the preferred bidder for Gautrain, one of the biggest projects it had ever undertaken.

Over the decade from 2000 to 2010, Murray & Roberts experienced significant growth: the project order book increased exponentially to R42 billion and revenues quadrupled to R32 billion. This period in the Group’s history was strongly characterised by the lead up to the 2010 Soccer World Cup and the infrastructure investment programme launched by the South African Government to replace ageing infrastructure and prepare South Africa for the largest international event ever hosted on the African continent. It was also a time of global expansion as demand for mining, energy and transport infrastructure increased. The Rebuilding and Globalising strategies had positioned Murray & Roberts for these opportunities and the Group was awarded the leading role in a range of major projects to upgrade road, rail and power networks. These included Gautrain Rapid Rail Link, the Medupi and Kusile power stations and the National Freeway Improvement Projects in South Africa, and the Gorgon Liquid Natural Gas (LNG) Project in Australia.

Recovery and Growth

But, the Group’s fortunes changed again as the prolonged economic recession that followed the 2008 global financial crisis impacted the South African economy and Murray & Roberts encountered significant difficulties on some of its major projects, particularly the Gautrain and Gorgon LNG projects.

A new management team, led by Henry Laas, was appointed in 2011 to lead a three-year Recovery and Growth strategy which is currently underway.

What has sustained Murray & Roberts in the past 110 years will, without question, position it for the future: its innovation, its focus on the customer, and the people who make both possible.

Information sourced from the Murray & Roberts archive, with special contributions by Brian Bruce.