Murray & Roberts (MUR) – A growing concern

Murray & Roberts produced strong revenue growth in FY23, but its overall performance was weak. The group was saved by the Mining platform, which delivered a good result, carried by a strong performance from the Americas division, while the Africa division stumbled due to setbacks at the Venetia and Arnot projects. The Mining order book fell in FY23 and the majority of the R9.1bn in near orders relates to the existing Venetia contract, therefore the platform does not seem to have many strong mining prospects. The PIW platform produced strong topline growth but remained loss-making. Although it is on track to turn a profit in FY24 through its renewable energy businesses, the platform’s prospects are slim. It has a one-year order book and no near orders for renewable energy or transmission line projects. If the PIW platform’s tenders are successful, it could secure work for the next two years and return the platform to profitability. However, that is quite uncertain at present and a cause for concern. Murray & Roberts is desperate to retain RUC to continue its operations in the APAC region, where it sees the largest potential for growth. RUC should be able to help MUR with much-needed cash flow. If the group can navigate the next year by improving cash flows and reducing debt, there is significant potential for growth. As more transmission line and renewable energy projects come to market, it should provide MUR with much-needed stability.