Stefanutti order book at R6.2bn

Johannesburg - Investment holding company with interests in the civil engineering, construction and mining industries, Stefanutti Stocks [JSE:SFB], on Tuesday reported a 19% increase in diluted headline earnings per share for the year ended February 2010 to 208.48c from 174.57c a year ago.

Headline earnings were up 31% to R392.1m, while HEPS were 21% higher at 224.34c.

A final dividend for the year of 45c per share was declared, making a full year dividend of 70c, compared with 2009's 58c.

The company said the results reflect a continued strong performance by the group in the face of continued tough trading conditions.

The group's diversified services and product offering successfully assisted in mitigating the cyclical nature in specific sectors in the wake of the international economic uncertainty.

Group revenue for the year rose 18% to R7.5bn, while operating profit was up 28% to R500.7m and net profit after tax increased by 22% to R389.2m.

With effect from August 2009, the company acquired 100% of the business operations of Waste Energy Recovery and Management (WERM). It also increased its shareholding in Ubuntu Building Ikapa, formerly an associate company, to result in Ubuntu becoming a subsidiary of the group. Stefanutti Stocks further acquired certain business operations of RGF Power Projects CC, effective April 12 2010.

Looking ahead, the group said emerging out of a good construction cycle the industry is experiencing a reduction in projects, especially large-scale, high value contracts.

Pressure on releasing tenders to market is coming from the public and private sectors, including the mining houses. These delays and postponements of projects have further depressed the industry, consequently profit margins are likely to remain under pressure in the short to medium term.

Indications point to a recovery in the domestic construction economy towards the end of 2010, with continued demand for public infrastructure and private sector development.

The latest economic research indicates that an upswing in the global economy is gradually gaining momentum and that emerging markets such as Africa are accelerating in growth. 2011 is generally expected to be a year of recovery with real GDP growth in South Africa anticipated to gain traction. In the interim the group will continue to place emphasis on achieving efficiencies in its structures and processes, it said.

The group said Africa remains a major focus area. Stefanutti Stocks intends to expand its entrenched presence in existing markets in Africa while also targeting expansion into other regions.

Further focus will be placed on growing the higher-margin business units including Roads & Earthworks, Mining Services and MEP. The group's increasing penetration of better performing domestic mining sectors as well as expansion in Africa bode well for growth. Within MEP previous capital investment is beginning to realise benefits and the business unit is strengthening its presence in its markets.

The group's strong financial position should enable it to withstand the challenges of the current economic climate. This competitive advantage enables Stefanutti Stocks to offer innovative contract and funding structures to secure further business. Stefanutti Stocks' order book stood at R6.2bn at year-end.

 - I-Net Bridge