Murray & Roberts banks on renewable energy projects to invigorate growth

Murray & Roberts (M&R) is confident that its loss-making power, infrastructure and water (PIW) division is well positioned to benefit from SA’s renewables and transmission sector, which is gaining momentum.       

The group said prospects in the renewable energy and transmission sectors look promising for its multinational mining business as a large proportion of the unit’s order book comprises projects in “future-facing” commodities, and its intention is to grow exposure to those commodities.

In a trading statement published just days before the group is expected to release its interim results on Wednesday, M&R said it is navigating a challenging period considering its debt levels. Net debt stood at R1.1bn for the year ended June 30.

The environment was compounded by supply chain disruptions, delays to project schedules and the associated deferral of milestone payments alongside global inflation, all of which put its liquidity under increasing pressure over the past 12 months.

While the group is much smaller following the recent loss of its investment in Australian holding company MRPL and its subsidiaries, M&R said it will continue to evaluate options to de-lever the balance sheet to achieve a sustainable long-term capital structure.

MRPL was placed under voluntary administration in December. That in turn led to the group losing control of MRPL and its subsidiaries, which include RUC Cementation Mining Contractors. 

M&R told shareholders that MRPL and its subsidiaries have been deconsolidated from the group with effect from December 5, which will result in MRPL and its subsidiaries now being reported as discontinued operations in the upcoming results, and this will have an effect on earnings. 

However, as many of its clients try to reduce their carbon footprint, the contractor, with its ability to design, engineer and build renewable projects for clients, is banking on an upswing for its services.

“The group remains optimistic about the prospects for its multinational mining platform and the new opportunities for the PIW platform, specifically in the renewable energy and transmission sectors in SA,” M&R said.

This renewed optimism comes just as asset operators are aligning commitments to net-zero emissions and to energy transition with sustainability expectations from clients, shareholders, funders and society at large.

As of December 31, M&R’s order book stood at R16.1bn with the mining platform representing the lion’s share at R14.1bn while the Southern Africa-based PIW platform represented R2bn.

In its latest integrated report, M&R said it was confident its PIW platform, which has seen activity slow for the past three years, is showing positive signs of recovery, particularly the renewable energy and transmission and distribution sectors, which offer growth opportunities.

PIW CEO Steve Harrison said the platform will focus on consolidation and growth over the next three years as it shows positive signs of recovery. This was seen specifically in the renewable energy and transmission & distribution sectors, which “offer exciting opportunities for us”, he said.

The group said its mining segment is also in line to benefit from the global shift towards clean energy amid surging demand for future-facing minerals that are integral to energy transition, including  lithium, nickel, cobalt, manganese and graphite.

The group said it recently started its first underground project using a battery-powered equipment fleet, indicating it is eager to expand the use of such equipment to other new projects.

“Our intention is to grow our exposure to these commodities and strengthen our relationships with related clients,” the company said.

While M&R plans to continue to perform maintenance work on Eskom’s ageing coal fleet, the specialist engineer cautioned it will halt its perusal of opportunities on coal power projects outside SA, as part of its bid to make a fundamental shift towards renewable energy projects.

M&R’s share price closed 5.28% lower at R2.51 on Monday.

gumedemi@businesslive.co.za