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M&R: Order book could grow to R80bn

But only one of the huge contract awards has been announced.
On the mend. Image: Moneyweb

JSE-listed engineering and construction group Murray & Roberts (M&R) could see its order book grow to about R80 billion by its financial year-end in June.

This is further good news for the group, following it reporting in March this year that it reached a record order book of R60.5 billion at end-December.

Reaching the R80 billion benchmark is however dependent on it being awarded four ‘Category 1 opportunities’.

So far, it has only been awarded one of these opportunities.

Oz pays off

This opportunity was the A$400 million Waitsia Stage 2 Project in Western Australia, which was awarded to M&R’s Australian subsidiary Clough and announced by the group in January.

However, M&R spokesman Ed Jardim said it is working diligently with its clients to bring the other projects to a final investment decision. Jardim said the largest of these contracts is the Perdaman Burrup Urea Fertiliser Plant with a value of about R20 billion.

“There are a total of three projects, including Perdaman, that we are in discussion about on a sole-source basis.

“All three should be announced this year, at least ahead of our annual results in August. Failing that, we will provide an update on these projects,” he said.

Power player

Jardim’s comments follow M&R reporting on Tuesday that Clough has been awarded a contract valued at about R1.1 billion for the engineering, procurement and construction scope for the Tallawarra B Gas Turbine Power Station.

M&R said Tallawarra Stage B is a 300 megawatt expansion of the existing Tallawarra A power station, which is located in New South Wales.

The group said the Energy, Resources & Infrastructure (ERI) platform trades under the Clough brand, which is associated with providing project service excellence for more than 100 years on large and technically and logistically challenging projects in the energy, resources and infrastructure industries.

“The platform has done well by establishing a good market position in the specialist infrastructure and resources growth sectors in Australia, both sectors which are expected to remain buoyant over the next decade,” it said.

Jardim confirmed that the Tallawarra project is not one of the sole source projects the group previously reported on.

Apart from these projects, M&R has announced two other significant contract awards since publishing its interim financial results in March:

  • A R2.3 billion contract awarded to RUC Cementation Mining Contractors, part of the group’s underground mining platform, for the shaft lining and equipping contract at Newmont Corporation’s Tanami Expansion 2 project in Australia’s Northern Territory; and

  • Clough being selected as head contractor for the construction of the main works of the Lombrum Infrastructure Project in Papua New Guinea (PNG), a joint initiative of the Australian and PNG governments to redevelop the Lombrum Naval Base, which involves about R2.5 billion scope of work.

Luister na Tinus de Jager se onderhoud met M&R uitvoerende hoof Henry Laas:

Profitable in 2022

M&R CEO Henry Laas said in March the group believes it is well positioned for a strong return to profitability in its 2022 financial year and expects further growth in earnings thereafter.

Marc Ter Mors, global head equity research at SBG Securities, said after M&R’s financial results presentation in March that the group’s growth recovery “could be quite exciting” provided there aren’t any hiccups in all the large contracts in the energy, resources and infrastructure division.

Shares in M&R rose 2.09% on Tuesday to close at R10.24.

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Sadly not even a breadcrumb for us SA companies that were suppliers to M&R for at least 30 years as in my case…

Simple Australia as fairly solid political opposition party from which keeps the ruling party on theirs toes, thus ensuring political performance which = construction performance. Sadly in SA the ruling party runs “coolever” divisive strategy for “its other” parties and thus guarantees a single party state control run by old school commys who prefer not to upgrade in the interests of self preservation and gain.

End of comments.

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