JSE-listed construction group Murray & Roberts (M&R) is eyeing a half-a-trillion-rand project pipeline; however, there is some uncertainty around the timing of the potential opportunities.
The group, which posted an improvement in its financial performance during the six months to December 31, had identified and targeted projects to the value of R558.4-billion, a significant rise on the R102.9-billion identified in the corresponding period the year before.
However, CEO Henry Laas on Thursday said the next 12 to 24 months would remain tough as commodity prices continued to fall, producers cut back on projects and other expenses as they battled to survive and demand remained weak.
The oil and gas sector accounted for about R276-billion of the R369-billion in potential opportunities that M&R had tracked and expected to come to the market in the next 36 months.
The group was working on about R111-billion worth of budgets, feasibility studies and prequalifications, with infrastructure and building and power and water accounting for just under R40-billion each in this category.
Meanwhile, work continued on tenders for some R78.2-billion – R30-billion in the oil and gas sector and R26-billion in underground mining.
Further, near orders – tenders where M&R was the preferred bidder and final award was subject to financial or commercial close – amounted to R12.4-billion by the end of December.
In January, R2.5-billion of those near orders had been transferred into the order book, Laas pointed out.
At the end of December, M&R’s order book stood at R40.5-billion – an increase of 7% on the R37.8-billion recorded in the prior corresponding period – mostly on the back of the rising underground mining business.
The underground mining division secured R16.3-billion into the current order book, up from R13.8-billion in the prior first-half, as mining companies moved to maintain their ongoing infrastructure replacement spend.
The infrastructure and building business also reported an increase in the order book from R6.4-billion in the six months to December 2014 to R7.4-billion in the six months under review.
Laas noted that, while the roads business had secured some work, the building market was slowing down, with the division now pursuing project development to mitigate against the risk of low margins in a soft construction market.
Meanwhile, the order book in the oil and gas unit declined from R12.2-billion in the first half of 2014 to R9.1-billion in the first half of the current financial year, with the sustained weakness in the oil price slowing down the implementation and ramp-up of projects and resulting in the deferral of projects and increased pressure on margins.
“The short-term future of the oil and gas market remains uncertain due to the low oil price; however, in the medium to long term, it is expected that new liquefied natural gas project opportunities in North America, Africa and Papua New Guinea will present attractive growth potential,” he added.
The power and water unit posted an order book of R7.7-billion during the six months to December 31, up from R5.4-billion in the corresponding period the year before, with about 91% relating to the power sector, as the unit continued to struggle to secure meaningful projects in a subdued market.