Murray on track with strategic plan


Murray on track with strategic plan

Published Date: 2019-11-29 | Source: Stephen Gunnion | Author: Stephen Gunnion

Murray on track with strategic plan

Its total order book has swelled to R54.8 million after US subsidiary Clough won a large petrochemical project.

Murray & Roberts says its New Strategic Future plan is gathering momentum and bearing results as it builds a better quality order book. The specialised engineering and construction services group says it also has the buy-in of major shareholder ATON, despite the German firm walking away from a takeover bid after a hostile reception.

The plan was hatched in 2014 and focuses on the group's specialised engineering and construction operations. It used the plan as part of its strategy to fend of ATON's takeover bid last year, maintaining that it had better prospects as a standalone group. ATON was keen to acquire M&R as its Underground Mining business was a good fit with its own Redpath Mining business. The Competition Commission also recommended that the deal be prohibited.

In a business update ahead of its annual general meeting yesterday, M&R said its order book reached R54.8 billion at the end of October, with near orders of R5.1 billion. While the order book for its Underground Mining business fell 8.3% to R20.9 billion since June, the order book for its Oil & Gas platform jumped 43% to R33 billion after US subsidiary Clough USA won a R9.4 billion petrochemical EPC (engineering, procurement and construction) project in the US. It said the award was expected to substantially increase revenue in the second half of next year. The order book for its Power & Water platform was stable at R900 million.

Although the global mining cycle appeared to have reached a plateau, with capital expenditure expected to level off over the next three years, M&R said there were still sizeable opportunities. However, it expected short to medium-term earnings to show measured growth from current levels.

Oil & Gas was recovering from a low base and client timeframes for new projects continued to be highly variable, it said. The platform's strategy of diversification into the Australian infrastructure and mining markets and expanding its oil and gas business was developing positive results. It said there were early signs of a medium-term recovery in the oil and gas markets and it was targeting projects in Australia, Canada, the US, Mozambique, Kazakhstan and Papua New Guinea.

Due to the lack of project opportunities in SA, it said it would take time to re-establish its Power & Water business post the completion of Eskom's Medupi and Kusile power stations. It expected substantial investment in the short to medium term in the transmission and distribution subsector of the power market and the platform was targeting maintenance contracts from Eskom's aging fleet of power stations, it said.

Its shares declined by 1.4% to R10.20 yesterday.

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