Construction and engineering group Murray & Roberts Holdings (MUR) have reported headline earnings per share unchanged at 71 cents for the six months ended December.
Attributable earnings for the half-year were down marginally from R230 million to R229 million.
The group said that adverse market conditions had slowed the pace of Rebuilding Murray & Roberts in the first half of the year and the strong rand was a major cause of a 20% reduction in revenues to R4.2 billion from
R5.2 billion in the the previous comparative period.
"The operating margin of 4.5% (2002: 5.0%) reflects the pressure on manufacturing profits and the challenging market conditions associated with international construction.
"Headline earnings are maintained at 71 cents per share (2002: 71 cents per share) off an operating profit (EBIT) down by 28% at R187 million (2002:R261 million) and a significant improvement of R66 million in net interest received compared with the corresponding period in the previous year.
"Surplus funds in the Group's international treasury were redeployed to strengthen the balance sheets of selected offshore operations with effect from 1 January 2003. No loss arises in the income statement in the current period (2002: R49 million).
"Operating cash flow was 94 million rand compared to a R23 million outflow in the previous corresponding period. Included in the working capital increase of R156 million (2002: R359 million) is the settlement of a troublesome property headlease at a cost of R42 million, which had been provided in a previous period," the group stated.
It added that it was on track to maintain a return above 20.0% on average shareholders funds in the full year to 30 June 2004. The group maintained an interim dividend at 15 cents per share in respect of the half-year ended 31 December 2003.
Looking ahead, the group said: "Rebuilding Murray & Roberts remains an absolute focus for the Board and executive management of the Group. The directors are confident that the work to date provides sufficient impetus to engage the challenges presented by difficult market conditions. Of particular emphasis will be a focus on market development and order book that secures the Group's commitment to sustainable earnings growth and value creation."
"The prospects statement in the annual report and the business update at the annual general meeting cautioned investors of current uncertainty in the Group's markets. In this respect, the domestic mining and industrial sector continues to offer limited major project opportunity."
"Manufacturing for export will remain marginal through the remainder of the financial year, whereas the general construction economy shows signs of sufficient activity to support current levels of activity in the Group's supplies and services business."
"Headline earnings for the full year to 30 June 2004 are not expected to be significantly different to the prior year."