Murray & Roberts endured a challenging FY24 but delivered much-improved results despite debt and cash management setbacks. Although performance is improving, it is still below ideal levels as profitability has been eroded by high finance costs, high effective tax and high overhead costs.
The group implemented a restructuring plan and cost-cutting measures in FY24, which should be realised in FY25, providing a good boost to profitability. Murray & Roberts’ working capital restrictions have and continue to hold back the SA operations. This led to OptiPower making a loss and limited order book growth.
In contrast, the Mining segment performed well due to a recovery at TNT and a better-than-expected result from Cementation Canada. With a strong pipeline of work and healthy order book, we expect growth to be driven by the Americas as Murray & Roberts heads into its next phase. The Africa operations, though stable, are facing challenges in SA and delays in Africa are expected to weigh on the SA operations and its cash management.
In this report, we analyse Murray & Roberts’ cash management in SA as well as the available options should it fail to secure financing by the end of October. We highlight the group’s reliance on dividends to service debt and reach an interesting conclusion about an OptiPower-less MUR. Our outlook for the group is positive, but if the SA debt is not settled within the next six weeks, it could limp along until its non-core assets are sold.