Bheki Mpofu
27 August 2009
Johannesburg — CONSTRUCTION and engineering group Murray & Roberts said yesterday it was looking for further acquisitions and planned to expand operations into the Middle East, Asia and South America after it survived the global economic crisis that has had severe effects on the construction sector.
The group's growth plans come after it reported results yesterday for the year to June, which like those of several of its peers in the sector -- such as Group Five , Basil Read and Stefanutti Stocks -- suggest that it remained resilient in the face of the economic downturn.
CEO Brian Bruce said the group had weathered the storm that saw R25bn, or 40%, of its orders being wiped off its books in a space of four months by the crisis. It was now focusing on its plans for expansion overseas, he said.
As a result of the termination or delay of projects, the order book is now down from the R61bn peak that the group reported last year. This resulted in the company shedding 7000 jobs.
"The order book has since settled at a level of R40bn, which means that over the past four months we have been winning as much work as we are doing on an ongoing basis," Bruce said.
Murray & Roberts posted a 23% growth in basic and diluted headline earnings per share, while revenue rose 27% to R33,8bn for the year to June. Operating profit also increased 27% to R2,9bn from R2,3bn in the previous comparable period. The company's operating margins remained at 8,6% despite the fall-off in second-half activity.
The group said the past financial year was one of two "very different" halves, with revenue growth in the second half coming in at 12% compared to the previous equivalent period and down from first-half growth of 44%.
Bruce said the group was now looking to expand its international operations, including those in the Middle East, where Murray & Roberts suffered project cancellations and postponements because of the global credit crunch.
The company was also gearing itself for opportunities in SA's nuclear energy sector and in the human settlements field and would seek opportunities for the development of economic infrastructure in the rest of Africa, Bruce said.
"We are looking at further acquisition opportunities and our international operations have plans to expand their markets in the Middle East, South America and Asia.
"We call this 'reframing Murray & Roberts', which defines our strategic response to the economic and market challenges where we are taking our proven business model and placing it within this different context, background and surrounding," Bruce said.
Last month Murray & Roberts said it had won a joint venture contract worth about R4bn to develop a major resort on Saadiyat Island in Abu Dhabi -- its biggest deal since experiencing a series of project cancellations and postponements. It said that it expected more contracts in future in the Middle East.
Bruce said the company remained confident that any slowdown in construction activity was temporary and that infrastructure markets remained on course for long-term growth. This view was supported by the company's project opportunity pipeline, which stands at R71bn, he said.
"In a year that delivered very different half-year performances, each operating company was stress-tested at year-end in the context of the global economic crisis. The year ahead will almost certainly present further challenges to the group and its operations. In its favour, the company has a good balance of work between its South African and international markets," he said.
The company yesterday declared a final dividend of 133c a share, increasing the total dividend for the year 11% to 218c per share.
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