Shares in construction group Murray & Roberts plummeted by more than 11.75%, or R4.66, to R34.99 on the JSE in afternoon trade after the group said it expects a marked decline in half year earnings.

Brian Bruce group chief executive of the group pointed to a rapid drop off in levels of activity in South Africa and bemoaned a payment dispute with Eskom for its contractual work at Medupi and Kusile power stations.

Murray & Roberts said on Friday that it expected diluted headline earnings per share (HEPS) for the half-year to December 31 to be down between 35% and 45%.

The group expected earnings per share for continuing operations to be between 30% and 40% lower.

"The group is critically reviewing its progress in the resolution of outstanding final accounts in the Middle East and claims resolution in SA, which remain slow and arduous.

"Trading conditions in both of the above markets have become tougher in recent months and cash collection relative to costs being incurred on public sector projects remains a concern," it said.

"As a consequence, an impairment charge on previously recognised uncertified revenues is expected to be taken for the half-year to December 31 2010," it added.

The group said that Dubai Airport, Gautrain and Medupi were public sector projects that had all suffered significant increases in their scope of works, over and above what had originally been
designed and contracted.

"This had resulted in significant delay and disruption with additional costs against which the company's clients had certified only limited payment to date.

Source: I-Net Bridge

Publisher: I-Net Bridge
Source: I-Net Bridge