Henry Laas, Group Chief Executive.

Construction group, Murray & Roberts’ (MUR) profit for the six months ended December 2014 fell to R369m from R863m last year as headline earnings per share from continuing and discontinued operations stayed flat.

In the results last week, the order book fell to R37.8bn from R44.9bn a year ago, mainly because of the changes to its oil and gas unit, which moved to smaller and shorter-term contracts, and a drop in new projects as a result of the oil price spike.

The group’s diluted continuing headline earnings per share (HEPS) were up 39% to 79c in the period from 57c in the year-earlier period‚ the international engineering-led contractor said after market close on Wednesday, 4 March.

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.”

Revenue from continuing operations amounted to R15.9bn from R18.8bn in the prior period‚ reflecting a reduction in revenue from the oil and gas platform‚ the company said.

The net asset value of R14 per share compares with R12 per share in the year-earlier period.

Looking ahead‚ the company said the South African construction market remained depressed and spending on new infrastructure halved in 2014 compared to 2013‚ largely due to reduced government spending.

Included in near orders was a residential development east of Pretoria‚ with a potential project value in excess of R1bn. 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‚ it said.

Murray & Roberts has been in the news a lot in recent years, both for its commercial struggles since SA’s hosting of the 2010  Soccer World Cup and its prominence in the Competition Commission’s fast-track process over industry collusion. 

It also comes as the City of Cape Town has lodged a R429m civil damages claim against WBHO, the group’s joint contracting partner in the building of the Cape Town Stadium, used for the global soccer extravaganza. 

But both the city and Murray & Roberts said there were no claims against the group. Instead, Cape Town executive deputy mayor and mayoral committee member for finance Ian Neilson said on Wednesday that a summons was issued out of the High Court on December 5 last year against WBHO, Stefanutti Stocks and SA’s largest construction group by turnover, Aveng. 

Mr Laas said Murray & Roberts had no “open items” in relation to the Competition Commission’s fast-track process against collusion in the industry. “We have not received any civil claims and are not implicated in the Cape Town Stadium.” 

Nedbank Capital said early this year that spending on new infrastructure halved last year compared with 2013. This was reflected in the earnings of Murray & Roberts’ peer, Group Five, which saw core operating profit plunge 35.5% in its interim results to December last year. 

Meanwhile, Aveng saw revenue fall 14% as net operating earnings dropped 19% and headline earnings per share plummeted 58% in the six months to December. 

The group said it was feeling pressure from a fall in mining investment and the poor roll-out of government infrastructure in SA. It also had major outstanding claims to deal with on an Australian natural gas project, which is common in the industry. 

Group Five said its civil engineering business was the problem. Apart from poor state infrastructure spending in SA, it has had difficulty with various projects in the country and also in the rest of Africa. 

The resulting lack of work meant that there was fierce competition in the industry and razor-thin margins for many players.  This has led South African construction companies to seek work in other parts of Africa, Australia and Southeast Asia. But Australia is also suffering from the rout of commodities prices, including oil.

SA Commercial Property