Murray & Roberts to benefit from global infrastructure-led post Covid recovery
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MURRAY & Roberts Holdings (M&R), the South Africa-based multinational construction and engineering group, has built a robust project pipeline in a world where substantial infrastructure investment is likely in the post-Covid environment.
The pipeline includes projects being negotiated on a sole-source basis, and it is anticipated the largest of these projects, worth about R20 billion, will be awarded to the group’s energy, resources and infrastructure platform during the current financial year, the group said in a business update yesterday.
At the end of the year to June 30, M&R had an order book of R60.7bn, which included several multi-year projects.
M&R said yesterday it was currently generating between R2bn-R2.5bn a month in revenue from its order book. It was maintaining the book value at about R60bn through the systematic addition of new project awards.
The group targets its construction and engineering services to the natural resources, industrial, energy, water, and specialised infrastructure market sectors.
These sectors are expected to benefit from extensive investment earmarked for a post-pandemic infrastructure-led economic recovery. This investment will also underpin the global shift towards clean energy and lower carbon emissions, the group said.
Its energy, resources and infrastructure platform, which is focused on the Asia-Pacific and Americas regions, held a stable order book of R37.2bn as at September 30, and its target markets were prospering, with Australian public and private sectors continuing to invest heavily in economic and resources infrastructure.
Significant revenue for the 2022 and 2023 years had been secured, underpinning an expectation of strong earnings growth from this platform over three years, the group said.
The multinational mining platform, which comprises three businesses in Africa, Americas and Australasia, was the most severely impacted by the pandemic, but had done well to grow its order book in the previous financial year and to protect its book from declining, especially in the Americas, the group said.
The start of a structural bull market in commodities had been foreshadowed in the forecasts of several investment banks, which point to a super cycle of commodities that supported the increased efforts to decarbonise the economies of the world.
The platform was anticipating order book growth, especially from the Americas, during the second half of the current year, but was not expected to report much earnings growth in the year.
Its order book fell to R20.8bn as at September 30, from R23.2bn at June 30, due to an agreement with Kalagadi Manganese, for the termination of the mining contract as at February 28, 2022, 16 months earlier than the contractual completion date.
The sub-Sahara focused power, industrial and water platform continued to face challenges due to a dearth of infrastructure investment in the region.
“The platform continues to perform routine, relatively small maintenance and outage works at Medupi and Kusile. Several transmission tenders invited by Eskom are under adjudication and it is anticipated that some of these projects will be secured in the short term.”
Imminent investment in the South African renewable energy sector, together with the expansion required of Eskom’s transmission network, was expected to provide potential for this business to return to profitability in the medium term, the group said.
The order book was R0.6bn as at September 30, compared with R0.5bn at June 30.