Murray & Roberts shares plunge on loss warning

Specialist engineering group Murray & Roberts (M&R) has flagged an earnings plunge of more than 100% for the year to end-June.

M&R, which has a market capitalisation of R293m on the JSE, on Monday said it expected to swing into a basic headline loss per share, the primary measure of profit/loss that strips out certain one-off items, of as much as 76c, hit by the loss of its Australian subsidiaries Clough and RUC Cementation Mining Contractors, which it has restated as discontinued operations.

In reaction, the share price plunged 12% to 66c on Monday, its lowest level in more than five years.

“The financial year to June 30 has been the most challenging period for Murray & Roberts since the 2008 global financial crisis,” the firm said in a trading statement.

“As a core group, Murray & Roberts has been able to withstand the material impact of the pandemic and notwithstanding the loss of its businesses in Australia, believes it will trade through what remains of this challenging period,” it said.

M&R operates in several regions and has global expertise in shaft sinking, tunnelling, raise drilling, engineering, design and contract mining.

The firm lost the mining unit RUC after MRPL and Clough were placed into voluntary administration, a form of business rescue, in October. This was as Clough experienced funding pressures due to Covid-19 disruptions and a surge in working capital requirements at two key projects.

After the voluntary administration process began in 2022, Clough, which held the energy, resources and infrastructure business unit, and RUC, a diversified underground mining contractor and raise drill specialist, were spun off from the group from December 5 that year.

Clough exited voluntary administration in February and Milan-based Webuild took control. 

The loss of RUC meant that the group’s mining platform now comprises only two regional businesses in Africa and the Americas which had combined orders worth R14bn at the end of last year.

M&R said while it has emerged as a smaller group following the loss of its businesses in Australia, management is committed to growing earnings from a pre-pandemic baseline and aims to deliver projects with increasing liquidity and operational efficiency.

“We are focused on reducing the group’s debt and delivering value by achieving our business plan cash-flow projections,” M&R said. “Even though the next few years will be difficult to navigate [we are] a group with a certain future.”

In March the company reported a net debt position of R2bn but it still had a healthy order book of R16bn.

The company has also said that considering its debt levels, it does not expect to declare a dividend this year.

M&R’s annual financial results for the year to June 30 are expected on Wednesday. 

gumedemi@businesslive.co.za