EDITORIAL: Murray & Roberts headwinds cut deep

Murray & Roberts (M&R) is by all means one of the consequential companies to emerge out of SA in the past 122 years.

Established in 1902, the company has been a lodestar in what SA companies can achieve in building world-class projects.

The group’s challenges are thus a cause for concern. Just 20 years ago, M&R was a beacon for the capabilities of the enterprise of SA’s corporates in shaping the landscape construction phase.

It bewilders and escapes investors’ logic that more than a century since its glorious establishment, M&R has resorted to business rescue in a desperate attempt to keep afloat.

The news on Friday that M&R has suspended the trading of its shares on the JSE is an indictment on how SA’s construction industry has fallen.

All things being equal, M&R should be the standard-bearer in the industry. Alas, after construction activity dried up following the 2010 World Cup activity, the company had to recalibrate its strategy and pivoted to mining.

This strategy misstep, as some would have it, has led to disastrous consequences, with the face of the legendary group almost indescribable.

It’s an indictment that M&R, with its prestigious history, has entered business rescue, weeks after the group warned shareholders that the cash crunch in its SA business was unsustainable, with the company also looking to sell noncore assets to shore up its liquidity — proceedings that the business rescue process is likely to speed up.

The company, whose stock is down more than 64% in the past three months, on Friday asked the JSE to suspend the trading of its shares on the bourse.

More worrying is M&R’s capacity to follow through on its key renewable energy projects, for which significant resources have been entrusted to the group.

M&R said in August that it had won the contract through its OptiPower Projects subsidiary, in a joint venture with Spanish energy infrastructure developer Coxabengoa. OptiPower’s share in the joint venture was 50%, it said.

OptiPower offers engineering, procurement and construction solutions for high- and medium-voltage power lines, substations and electrical balance of plant scopes of work for renewable energy projects.

M&R’s shareholders could only wish for the best with their return on investment failing way short of what investors sought to expect from corporates that have ploughed their clients’ money in.

Longer wait

M&R has not paid a dividend since 2019 — with the business’ rescue suggesting an even longer wait for shareholders to see a return on investment.

The company’s largest shareholders are Aton and Excelsia Capital.

M&R left SA’s construction sector in 2016 as projects dried up after the spending frenzy before the 2010 Fifa World Cup. It has since focused on the resources, industrial, energy and water sectors. The strategic change saw more than 80% of M&R revenue coming from projects undertaken by its mining unit.

As the group’s recent headwinds show, the dearth of construction projects and their capacity to do well are an indictment on SA’s investment in infrastructure.

But the near demise of SA’s infrastructure behemoths is not only due to the failure to seize opportunities in the market, but also the failure of the state to follow through on infrastructure projects. One can only hope that the ambitious infrastructure projects announced will bear fruit and create the necessary jobs.

SA is out of jobs and the construction sector is one of the sectors that can bring young people into jobs. Let’s do better.