M&R sees bigger Australian loss
Murray & Roberts Holdings, SA’s second-largest construction company, says its expected loss for the Gorgon Pioneer Materials Offloading Facility on Barrow Island, Western Australia, has widened by an estimated R520m.
The project may be completed "towards the end of the third quarter of the fiscal year, about three months later than previously expected," Murray & Roberts said in a business update.
The wider loss is "over and above the loss accounted for at the end of previous financial year". Chevron plans a large liquefied natural gas project on the island.
Murray & Roberts, which helped build the Gautrain rapid rail link between Johannesburg and Pretoria, reported a net loss of R1,74bn for the year through June, compared with profit of R1,1bn a year earlier.
It halted dividends, citing the company’s liquidity position.
Funding needed for the Gorgon project, together with delay and disruption costs linked to water ingress on its Gautrain project, continue to put pressure on Murray & Roberts’ liquidity, the company said.
"It looks like the company will have pretty weak results again this year," Dirk Noeth, an analyst at Avior Research, said. "I think investors are feeling some fatigue with this company reporting continued losses."
Murray & Roberts has slumped 40% this year in Johannesburg trading, compared with a 2,5% loss for the benchmark FTSE/JSE Africa all share index. A growing infrastructural backlog in SA is giving Murray & Roberts hope for the medium term, but the construction sector remains weak in the short term, it said in its business update.
The government’s R810bn infrastructure programme supported the long-term growth prospects for the construction and engineering sector. But when these projects will commence is uncertain.
Overseas things were not looking bright either with market conditions in the Middle East deteriorated further. The group said in its business update that the building market in Dubai had come to a complete standstill and activity in Abu Dhabi was muted.
Murray & Roberts said it was shifting its focus to Qatar, which in the medium term would present opportunity for civil and building works. Locally, the water ingress rectification works on the Gautrain were progressing in line with assumptions used to calculate the costs to completion and should be completed by end-December.
The statement of case for the Gautrain delay and disruption claim had been submitted to the Arbitration Foundation of Southern Africa.
The group’s order book remained strong at R56bn, marginally up from the R55bn as reported at the June year-end.
The group said it was its objective to return to profitability as soon as possible after a R1,7bn loss.
