Murray & Roberts shares plummet 9% amid repressed market

Posted On Friday, 25 February 2011 02:00 Published by Commercial Property News
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Murray & Roberts shares continued to sink as investors took a rather dim view of its current arbitration proceedings, poor interim results.

Brian Bruce Murray & RobertsShares in construction group Murray & Roberts continued to sink on Thursday as investors took a rather dim view of its current arbitration proceedings, poor interim results, an outgoing CEO and the repressed state of the local construction market.

By 3.45pmpm shares in the group had declined R2.54 or 9.27% to R24.87, from a one-year high of R48.45, which was achieved in April last year.

On Wednesday, the group reported a diluted headline loss per share of 177 cents for the six months ended December 2010, from diluted headline earnings per share of 200 cents previously.

It noted an attributable loss of R636 million, from a profit of R576 million in the six months to December 31 2010, including exceptional items of R795 million and a loss on discontinued operations of R326 million, primarily relating to the rationalisation of the group's reinforcing steel operations and operating losses in Johnson Arabia.

Outgoing CE Brian Bruce said on Wednesday that the outcome of various arbitration proceedings relating to a range of complex claims on major projects remained uncertain.

Major projects alluded to include the Gautrain system, Eskom's Medupi and Kusile power stations and the Dubai International Airport.

Murray & Roberts is also facing potential fines for collusive behaviour as the Competition Commission begins its investigation into the industry.

Speaking at the group's results presentation on Thursday in Sandton, Johannesburg, Bruce said that any collusive practice by the group had ceased in 2003-2004. "To date we have gotten leniency in all of our cases. The mindset of Murray & Roberts is non-collusive."

The CEO noted, however, that the group had made some calculations about any potential costs it may incur, and had set aside provisions for any potential fines. "We don't expect a fine unless it for something we do not know about," he said.

A local equities analyst also cast doubt over the timing of Bruce's departure. He said that Bruce had been "paroled out", having initially planned his retirement in 2009.

He added that while the group's forward order book looked "ok", its overhanging legal issues and project woes painted a bleak picture going forward.

Bruce and financial director Roger Rees will retire at the end of the current financial year. Bruce would have served 11 years at the helm.

The board said succession plans were already in place, having identified at least two potential internal successors. It added that its net had been spread externally and abroad.

Looking at the local market, Bruce said: "We have gone into a very rapid depression post the World Cup. The South African market is very tough. There is a dearth of new projects in the market place."

Bruce added that the group's local order book was still dominated by its power programme, compounded by the fact that the value of projects was also in decline. He said that the work tendered for and converted to its order book for the six months up to December 2010, had declined to 17%.

"Murray & Roberts needs a 25%-26% success ration. If you are a predator, your success rate should be one in four."

Last modified on Friday, 28 June 2013 01:46

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