Rand, Coega chip away at Concor results

Posted On Monday, 20 September 2004 02:00 Published by Commercial Property News
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Cash generated drops 65% to R10,8m

Cobus Bester Murray & Roberts Construction group Concor's cash from operating activities plummeted 65% to R10,8m in the year to June as the strong rand squeezed construction demand for big capital projects.

Headline earnings for the year to June fell 15,3% to 132,9c a share and revenue dipped 1,1% to R1,38bn compared with the previous financial year, the group said yesterday.

Technical problems on a R100m contract to build a jetty at the new Coega harbour in Eastern Cape also dented group results.

Jan Engelbrecht, appointed as acting CEO when John Willmott left the company last month, said yesterday the group had made a R30m provision for the contract, which is scheduled for completion in October next year.

Meanwhile, a turnaround in the group's road construction activities in Botswana helped lift group operating income before interest 6,4% to R24,6m.

Financial director Kobus Bester said yesterday that this was still well below the company's target.

Bester said the group order book dipped to a low of R550m in the first half of the financial year, but picked up in the second half to close at R900m at year-end.

This was slightly higher than an order book of R850m at the previous year's end.

Engelbrecht, a former GrinakerLTA director, said he believed intensified growth in orders in the last three months of the year under review could be indicative of an uptrend in the market.

He said he was "reasonably optimistic" that the new financial year would be better than the year now under review.

"The mines have to adjust to the stronger rand " said Engelbrecht, in the hope that mining companies, which had shelved projects worth several billion rand when the currency strengthened, would come back on line soon.

The construction industry also expected to benefit from government's promised infrastructure spending, including spending ahead of the 2010 World Cup, said the group.

"However, delivery of projects, due to government capacity constraints, remains a concern."

Concor said its civil work division had had an "extremely difficult" year with very little work from the mining sector. This, in part, had led to depleted cash resources during the period, which saw the group's net interest income falling to R633000 compared with R11m in the previous year.

Group income before tax fell 26% to R25,2m from R34,2m.

Concor said all contracts in its engineering division performed above expectations, but the division made a small loss due to reduced revenue and, as a consequence, recovery on its fixed costs was not as high as the company would have liked . The building division had a full order book.

Concor's concrete products division, Technicrete, also produced sound results for the year on the back of lower interest rates, and as a result of increased efficiencies, the group said.

Concor closed 1,23% down, at R8 on the JSE Securities Exchange SA in trading yesterday.

Last modified on Wednesday, 25 June 2014 17:02

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