Future: Murray & Roberts CEO Henry Laas Picture: SUPPLIED
Future: Murray & Roberts CEO Henry Laas Picture: SUPPLIED

Murray & Roberts (M&R) said on Thursday it expected the growth of earnings from its underground mining business to slow down amid expected lower capital expenditure in mining in the next three years.

M&R, which has a market capitalisation of R4.5bn, said in an update to shareholders that, while the underground mining business continued to perform well, its order book declined to R20.9bn as at October 31, compared with R22.8bn in June. The order book for the whole group is R54.8bn.

“As one of the largest underground mining contractors in the world and against the background of the recovery in commodity markets over the past few years, the platform has done well to capitalise fully on its growth potential by substantially increasing its share of the regional markets in which it operates,” M&R said.

The company said commodity prices had generally been stable in the past two years. However, the global mining cycle appeared to have reached a plateau.

“Capital expenditure in the mining and mining services markets is expected to level off over the next three years. The group believes that there are still substantial opportunities for the platform, but expects short-to-medium term earnings to show measured growth from current levels,” the company said.

M&R said, following several acquisitions, its focus in the 2020 financial year would be to grow its order book and to ensure delivery of projects. It said 2020 would be a “year of consolidation” for all its three business platforms — underground mining, oil and  gas and power and water.

It said the order book of the oil and gas business had increased from R23.1bn in June to R33bn as at October 31. It attributed the increase to the award of a R9.4bn petrochemical engineering, procurement and construction to subsidiary Clough USA. It said the contract was expected to increase revenue during the 2020 financial year.

M&R said the power and water business’s order book remained largely unchanged at R900m. “Due to a lack of project opportunities in SA, it will take time to re-establish the business post completion of the Medupi and Kusile power stations,” the company said.

It said the business was targeting maintenance contracts for Eskom’s ageing power stations. Investment in SA’s water sector was fragmented and limited “notwithstanding the increasing pressure to upgrade dysfunctional municipal treatment plants”.

M&R shares were down 1.36% to R10.20 on Thursday.


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