M&R’s new oil and gas focus: Wheatstone project, Onslow, Western Australia. Picture: MURRAY & ROBERTS
M&R’s new oil and gas focus: Wheatstone project, Onslow, Western Australia. Picture: MURRAY & ROBERTS

Specialist engineering group Murray & Roberts (M&R) says it is optimistic about its growth prospects, as recently awarded contracts start contributing to earnings. It is expecting a return to profitability in its 2021 financial year.

The group said on Monday that construction and engineering subsidiary Clough had been awarded an A$400m (R4.75bn) contract for a gas processing plant in Western Australia, the latest success for a company that exited the construction industry in 2016.

The project is set to commence during the first quarter of the 2021 calendar year and will bring significant economic benefits to the region, the group said, with Clough’s work related to a gas processing plant, including power generation.

The specialist engineering group, which started life in 1902 as a builder in the then Cape Colony, has spent the past few years diversifying its businesses to mitigate its exposure to cyclical natural resources contracts. It said recently this had paid off during the Covid-19 pandemic, and it has expanded its scope in terms of contracts it takes on.

Its diversification has included its oil and gas business taking hydroelectric projects, or gas to power projects, after being exclusively focused on liquefied natural gas in Australia.

M&R said on Monday the second half of its 2021 year ended June was expected to show improved performance. M&R expects to return to profitability to end-June, and “continue its path to earnings growth beyond”.

In its year to end-June 2020, the group posted a R371m loss, estimating the effect of the Covid-19 pandemic at R622m as it delayed or disrupted projects. The group, however, said it had an order book of R54.2bn at the end of its 2020 year, up almost 16% from the prior period.

The importance of the group’s Australasian operations has also been growing in importance, generating more than half of its R20.8bn in revenue to end-June 2020, from 37% in the same period in 2015.

“The expectations for economic recovery after Covid-19 are uncertain and revised frequently,” M&R said on Monday.

“The group is, however, well positioned to operate through the short to medium term uncertainty,” the statement read.

In morning trade on Monday M&R's share was down 0.36% to R8.37, having fallen 22% over the past 12 months. The group’s share price has fallen more than 90% since its high of R100.71 in 2007, when SA’s construction stocks were boosted in the run-up to the 2010 World Cup.

gernetzkyk@businesslive.co.za

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