M&R's share price falls as it warns of the financial impact of order book delivery disruptions
The JSE share price of engineering and construction group Murray & Roberts (M&R) fell by nearly 40% on Monday morning, after it told shareholders that a number of its projects were progressing slower than planned, impacting on margin and the group's working capital requirements.
The group referred to its stakeholder report for the year ended June 30, in which it disclosed that the delivery of its order book was increasingly being disrupted and that increased levels of working capital were required to address the dislocation in project cash flows.
It added that disruptions in supply chain delivery and delays in project milestone payments were persisting.
"Margin deterioration has recently been recorded at the Traveler project, in the US, and the Waitsia project, in Australia, both of which will be close to completion by the end of financial year 2023," it pointed out.
"The group has a reasonable degree of certainty that the margin deterioration described above will result in the financial results for the six months period ending December 31, to be at least 100% down on the previous and corresponding reporting period.
"At this stage, the board of directors of the company does not have reasonable certainty on the earnings per share ranges. The group will, however, publish an updated trading statement once there is more certainty on these ranges," it added.
M&R further noted that the group's working capital requirements were especially acute in its Energy, Resources & Infrastructure business platform and that the group was reviewing its strategic options to deal with the platform's near-term working capital requirements.
The group's share price fell to R4.02 in early morning trade on Monday, a decrease of 39.27% on Friday's closing price of R6.62. Prices, however, rebounded somewhat to R4.25 by 10:15 on Monday.
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