The biggest culprit in Stefanutti Stocks’ R162-million loss for the year ended February 28 is the building division’s dismal performance, says Stefanutti Stocks CEO Willie Meyburgh.
While the proposed R323-million penalty imposed by the Competition Commission, provided for in the 2013 results, as well as the roughly R80-million impact of labour unrest in the country in the past financial year added to the body count, the company’s underperformance was largely due to the fact that “we took our eyes off the ball a bit in [the] building [division]. We blame ourselves for what happened”.
Stefanutti Stocks had to pay penalties of more than R40-million for the late completion of building projects, mostly in Gauteng and Mozambique.
In the end, the building division reported a loss of R40-million for the year, with the mechanical, electrical and power division recording a R51-million loss.
Stefanutti Stocks reported a total group loss of R162-million for the financial year, compared with a R264-million profit the previous financial year. Operating margin was at 2.5%, down from 4.5%.
Revenue increased by 16.8% to R9.3-billion.
“The loss-making projects are behind us now,” comments Meyburgh.
In addition to this, Stefanutti Stocks is chasing new work at “reasonable margins”, and no longer at “suicidal prices”.
Meyburgh also calls for a solution to the labour unrest in the country, as the current high frequency of work stoppages is unacceptable.
Late payment by private clients is also a concern.
Stefanutti Stocks’ May order book stood at R10-billion, up from the R8.5-billion recorded at the end of February.
Much of this comes on the back of a “fair amount of medium projects” in the marketplace, with no real large projects available at the moment, says Meyburgh. It also appears mining and State-owned companies are holding back on capital expenditure.
Stefanutti Stocks earned 23% of its turnover outside South Africa in the financial year ended February 28, and aims to increase this to 30% within the next two years.
Opportunities in Southern African Development Community countries, such as Mozambique, will make this possible, says Meyburgh.
He expects a better performance from Stefanutti Stocks in the new financial year, as the group has eliminated loss-making contracts, renewed its focus on contract execution and expanded its order book.
Stefanutti Stocks CFO Dermot Quinn adds that the group has already seen a much improved performance in the second half of the financial year, indicating that a recovery is well under way.