Murray & Roberts reports disruption in the supply chain and delays in project payments.
Engineering and mining group Murray & Roberts’ share price plummeted on Monday 17 October after the construction giant issued a profit warning that it expects its half-year results to be down by at least 100%.
Shares plunged to USD 0.22 (ZAR 3.99) by mid-morning from Friday’s close of USD 0.36 (ZAR6.54), down more than 40%. In late afternoon trade they recovered partially to USD 0.24 (ZAR4.32).
Murray & Roberts: Order book disrupted
In a SENS (Stock Exchange News Services) announcement, the group referred to its stakeholder report for the year ended 30 June 2022 in which it disclosed that delivery of its order book was increasingly being disrupted in the current environment and that increased levels of working capital were required to address the dislocation in project cash flows.
“Shareholders are advised that the disruption in supply chain delivery and delay in project milestone payments continue to persist with a number of projects progressing slower than planned, impacting margin and working capital requirements,” warned the announcement.
In terms of the JSE (Johannesburg Stock Exchange) Limited Listings Requirements, companies are required to publish a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial results for the next reporting period will differ by at least 20% from the previous and corresponding reporting period.
“The group has a reasonable degree of certainty that the margin deterioration will result in the financial results for the six months period ending 31 December 2022 to be at least 100% down on the previous and corresponding reporting period,” read the statement.
A new strategic future
In September, CEO Henry Laas outlined a new strategic future to transition Murray & Roberts away from a South African civil construction company to become a multinational engineering and contracting group. Laas said the plan was “to position ourselves as a multinational business. We also need to position ourselves in the market sectors where we believe we will achieve the best growth.”
From a capability point of view, it was important for the company to enhance its capabilities to provide a service across the lifecycle of a project. “Engineered excellence is the philosophy we adopt within the group. And that is to achieve excellence in whatever we do. And it is engineered excellence, which means it does not happen by chance. We plan to achieve a certain outcome.”
Operationally, Murray & Roberts is organised into three business platforms, Energy, Resources & Infrastructure, Mining, Power, Industrial & Water. Each is managed by a separate CEO. “We share a common purpose; we share a common vision and a common set of values within the organisation,” said Laas.
The SENS announcement continued: “At this stage the board does not have reasonable certainty on the earnings per share ranges. The group will however publish an updated trading statement once there is more certainty on these ranges.”