Murray & Roberts CEO Henry Laas. Picture: SUNDAY TIMES
Murray & Roberts CEO Henry Laas. Picture: SUNDAY TIMES

Construction and engineering group Murray & Roberts (M&R) is set to swing into a loss as the lockdown associated with the Covid-19 pandemic hit the company’s operations towards the end of the first quarter, and well into the second, of 2020.

The company said on Wednesday that is would report a loss for the year to end-June 2020, having made a profit for the year to end-June 2019.

“We were on course to improve our performance in 2020 but the impact of Covid-19 has been substantial. The direct profit impact of this pandemic on projects during the year is estimated to be  R622m,” the company said.

“This negative impact, combined with the impairment of an R80m vendor loan relating to the sale of Genrec, now in business rescue; the impairment of R63m relating to good will on two group companies due to market uncertainty; and the impairment of R46m of non-certified revenue on a claim, created a perfect storm for the group,” CEO Henry Laas said.

M&R and other construction groups are trying to win back investors after battling through a decade in which SA’s government has underspent on infrastructure projects. An economy struggling to grow has prompted M&R, as well as some of its peers, to look for work in other countries, including Australia.

The company said it has a “significant, quality” order book of R54.2bn and near orders of R11.4bn, which underscores its board’s confidence in the group’s strategy.

Its project opportunity pipeline includes a “significant value of near orders, and category one opportunities include four projects, which were being negotiated on a sole-source basis, with a combined value of approximately R40bn.

Laas said the group’s financial position is robust and sufficient to fund its growth plans and debt was within its “targeted range”.

He said the company will focus its next financial year on at least maintaining its order book at current levels, “if not growing the order book, improving project execution, reducing working capital, progressing digitalisation, and exiting our Middle East projects”.

Laas said he expects M&R to make a profit again in its financial year to end-June 2021.

M&R shares closed 2.07% higher at R5.92 on the JSE on Wednesday, and have lost about 44% so far in 2020.

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