Stefanutti lifts profit despite lag in tenders
CEO Willie Meyburgh says infrastructure markets in SA are ‘extremely competitive’ with a shortage of work for contractors
JSE-listed construction company Stefanutti Stocks reported an improvement in operating profit in the six months ended August, despite "a challenging trading environment".
Operating profit rose from R100m previously to R119m for the period, with the operating profit margin remaining consistent at 2.3%. But the increase was offset by a rise in the effective tax rate and minority shareholders’ interest. This resulted in a fall in earnings and headline earnings per share of 15% from the same period in 2016.
Infrastructure markets in SA were "extremely competitive" and there was a shortage of work for contractors, CEO Willie Meyburgh said. There was little infrastructure spend from the private and public sector, which puts pressure on margins, he said. This was despite substantial building work completed in Sandton.
Contract revenue from operations rose to R5.2bn in the period compared to the same period in 2016.
The company operates across SA, sub-Saharan Africa and the United Arab Emirates. It is involved in concrete structures, marine construction, piling and geotechnical services, roads and earthworks, bulk pipelines, open-pit and surface mining services, and all forms of building works, including affordable housing and mechanical and electrical installations.
The group’s United Arab Emirates operation contributed R16m, down from R21m in August 2016, but was on track to meet its full-year target.
Meyburgh said Stefanutti Stocks was handing over two shopping centres it built in Maputo. But there was a "definite decline" in the number of tendered projects. This included awards from the South African National Roads Agency, which was way behind in issuing consulting service tenders.
"We view the results in a positive light as the company is making money on an operational level," Dexter Mahachi, an analyst at Momentum Securities, said. "We are also encouraged by the fact that management has been finding opportunities to increase revenues in a tough economic environment. The high tax bill remains the main issue, but we believe that can be overcome with time."