Construction group Murray & Roberts has concluded the recovery year of its three-year recovery and growth strategy, says CEO Henry Laas.
With the 2013 and 2014 financial years now labelled as growth years, he warns, however, that there is no “remarkable recovery” envisaged in the construction industry that will benefit Murray & Roberts. The growth the group hopes for will rather have to come from a return to its core focus of construction and engineering.
Two industries the group has targeted specifically for their “strong growth potential” are mining, and oil and gas, with emphasis on markets outside South Africa, says Laas. He notes that the group’s mining business in the rest of the world is already outgrowing its activities in South Africa.
Laas notes that investors could expect to see Murray & Roberts’ offshore revenue base increase as it exploits this potential, which will require some “alignments” within its operations.
Already there has been a 20% increase in revenue earned abroad from last year’s order book to the one for the financial year ended June 30. Around 40% of the revenue for the current R45.3-billion order book will be earned in the Southern African Development Community (SADC), and 60% abroad.
“Last year this was the opposite, with SADC at 60%,” says Laas.
R19.4-billion of the current order book rests with Murray & Roberts’ Australasia oil and gas, and minerals business platform, up from R6.7-billion in 2010. All of this revenue will be earned outside South Africa.
Laas says expansion into the rest of Africa is also important to the group.
In two weeks’ time, the CEO is scheduled to open a Murray & Roberts office in Ghana, which will serve as the West African hub for the company’s engineering platform.
Zambia will act as the company’s hub for Central Africa, with the mining business taking the lead there when an office opens later in the 2013 financial year.
Kenya has been identified as the hub for East Africa, although there are no current plans to establish a permanent office in this country.
Laas emphasises that Murray & Roberts will not “run into Africa”, but that its expansion will be “strategic and selective”.
He adds that the company’s recovery and growth strategy will be followed by a plan for a “new strategic future”, which is to be developed over the next two years.
Murray & Roberts earlier this week reported an attributable loss of R736-million for the financial year ended June 30, with R208-million of this notched up in the second half of the year, following on from a R1.735-billion loss in the previous financial year.
Laas says he “really wanted” to be in the position to “talk about profits” this year, but that it “was just not possible”.
However, he says he is pleased with the upwards trend, indicating that Murray and Roberts could be “moving to a position of profitability”.