Murray and Roberts would focus on three core sectors in future — underground mining, oil and gas, and power and water, the group said on Wednesday in a provisional report for the year ended-June and in a further cautionary notice.
It would dispose of its infrastructure and building businesses and Genrec, a steel- making and engineering services group. The former transaction was far advanced, CEO Henry Laas said. This meant the company would no longer build ports, roads, dams, and buildings, including offices, hotels, and malls in SA.
Instead, it would concentrate on the international natural resources sector, becoming a multinational engineering company. This came as diluted continuing headline earnings per share fell 10% in the period, and attributable earnings dived 15% to R753m from R881m a year earlier. But revenue from continuing operations rose 9% to R26bn from 2015.
“We are not exiting the South African market — it is about exiting a sector,” Laas said. Civil engineering and construction markets in SA were weak since state infrastructure spend was focused on finishing the Medupi and Kusile power stations, and rail projects in SA.
Oil and gas and underground mining had traditionally contributed 80% of group profit, Laas said. The tightened group focus would now be on oil and gas in Australasia and the US and Canada. Underground mining would concentrate on SA and the rest of Africa, Australia, Canada, and the US, he said.
Roelof Brand, a construction market analyst at Avior Capital Markets, said: “Any meaningful growth in revenue will be dependent on a recovery in oil and gas capex spend. I expect earnings to remain under pressure, given the current oversupply in the market and low oil prices.”
Laas said the South African National Roads Agency was one entity that was providing opportunities in construction, but provision of water treatment services was lagging, despite being a government priority.