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Johannesburg - Construction group Murray & Roberts has unveiled a sweeping restructuring of its business amid a global economic recession which has rubbed out R43bn worth of potential business, and caused a R15bn decline in its order book year-on-year.
In its full-year results, reported on Wednesday, the group acknowledged a slowing in business activity in the second half of its financial year.
Nonetheless, it maintained a full-year operating margin at 8.6 and - owing to a strong first half performance - reported a 13% increase in net earnings of R2.4bn.
It declared a dividend of 218 cents per share.
"The consolidation is interesting because we're reconsolidating," said Murray & Roberts CEO Brian Bruce in an interview. "We are making it more efficient to run our businesses."
As a result, the group would consolidate its operations into six large business clusters. Three of these would be focused on the domestic and Southern African Development Community (SADC) market, while the other three would look towards global and international markets.
"We've been cautious; the crisis is not through yet," said Bruce of the economic recession.
Eskom hopes
The market had been difficult, however. Murray & Roberts' potential project pipeline of R96bn announced at last year's results had been reduced to R56bn following terminations.
And the group's order book, largely owing to construction cancellations in the Middle East totalling R25bn, had fallen, although new projects enabled Murray & Roberts to regain some ground in its order book.
Commenting on business prospects, Bruce said South African government infrastructure spend would continue. He was also hopeful of clarity on Eskom-related projects which had been iced owing to the utility's funding constraints. Eskom is due to report its financial results on Thursday.
Meanwhile, Murray & Roberts' international business, Clough, would benefit from a recovery in the oil price after it hit lows of about $33/barrel in March. "The oil price has increased, so there are expected to be projects," said Bruce.
Despite the economic crisis and recession in many of the group's markets, most operations delivered "creditable performances" in the 2009 financial year, said Bruce.
Murray & Roberts reported revenue growth of 27% to R33.8bn for the year to end-June 2009. Operating profit rose by 27% to R2.9bn.
- Fin24.com