Murray & Roberts reports HY HEPS loss

Listed engineering and mining contractor, Murray & Roberts, recently reported another interim headline loss per share of 30 cents but did announce a promising uptick in near orders amounting to a 3 billion rand increase in the six months leading up to December 2021. Henry Laas, the CEO of Murray & Roberts, addressed the challenges faced by the company in a recent interview with CNBC Africa. The company's operating environment has proven to be quite difficult, with Laas attributing much of the struggle to issues surrounding liquidity. The impact on liquidity was exacerbated by supply chain disruptions, which caused project progress to slow down and delayed master payments. This, in turn, contributed to the overall liquidity position of the company. In October of the previous year, one of the company's entities in Australia, Clough, required a capital injection that Murray & Roberts was unable to provide, leading to the businesses being placed into voluntary administration. The loss of these businesses in Australia has resulted in a challenging debt position for the group. Despite these setbacks, Murray & Roberts is taking steps to address the liquidity challenges by disposing of its investment in the Bombera concession company, which is expected to bring in approximately 1.3 billion in cash by the end of March. This cash influx will be used to settle the group's debt, although even after this repayment, the debt level is expected to remain high but manageable. Laas emphasized the importance of the company's mining business as a key source of income and cash flow moving forward. While the order book for the mining business has seen a slight decrease from the previous year, Murray & Roberts remains optimistic due to a strong near order pipeline valued at around 14 billion. Laas pointed out that the loss of businesses in Australia has reduced the company's cash-generating units, leading to liquidity pressure, but he expressed confidence in the future of the mining business. In terms of deleveraging the balance sheet and improving the debt position, the company is focused on the disposal of the investment in the Bombala Concession Company, which is expected to significantly reduce the net debt within the group. Murray & Roberts also aims to explore cost reduction strategies and opportunities to grow its cash-generating units. Despite the marginal decrease in the order book, currently standing at 16.1 billion, Laas reassured that Murray & Roberts is confident in its ability to restore the order book to prior levels by the end of the financial year. The company has secured 2 billion in orders through its PIW platform, primarily in the renewable energy sector in South Africa, presenting a significant opportunity for growth. While renewable energy projects in South Africa have faced delays, Murray & Roberts sees potential in providing services for the transmission lines and major substations associated with these projects. The company is targeting securing large PV plant projects in addition to wind farm projects, with the current order book already at 2 billion. Laas highlighted that a large PV plant project could represent a value of 1.8 to 2 billion, making a substantial impact on the company's order book. Murray & Roberts is optimistic about its involvement in the renewable energy space and aims to return its PIW platform to profitability through these opportunities.