M&R receives R1.6bn in new project awards

Further boosting its all-time high order book.
The group has also submitted R84bn in bids for Category 1 tenders (tenders that are currently under adjudication). Image: Shutterstock

JSE-listed multinational engineering and construction company Murray & Roberts (M&R) has received R1.6 billion in new project awards in Australia, further boosting the value of its all-time high order book of R60.7 billion at end-June 2021.

M&R said on Thursday that after five years of strategic repositioning to diversify its Energy, Resources & Infrastructure (ERI) platform away from its dependence on a single cyclical market in Australian liquefied natural gas (LNG), the platform’s order book now reflects its thriving target markets, reaching a historic high in the year.

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“Considering the significant levels of revenue secured for FY2022 and FY2023 and a strong pipeline of project opportunities, it supports the group’s expectation of strong earnings growth from this platform over at least the next three years,” it said.

Responding to the announcement about these new contract awards, shares in M&R rose 5.25% on Thursday to close at R13.83.

Providing more details about the contract awards, M&R said on Thursday that SecureEnergy, a 50/50 integrated joint venture between Clough and global Spanish infrastructure and concessions group Elecnor, has been awarded additional work to the value of about R1.2 billion on the EnergyConnect project.

It said Clough’s share is about R600 million.

Clough is a M&R subsidiary and the brand name for M&R’s ERI platform.

The additional work awarded to the joint venture follows it being selected in October 2020 as the contractor for an about AU$1.5 billion contract for TransGrid’s Project EnergyConnect.

The value of the initial contract was about R16 billion for the design and construction of an energy interconnector overhead powerline between the power grids of South Australia and New South Wales, with an added connection to Victoria, which includes four substations and about 700km of 330kV transmission line.

M&R added on Thursday that Main Roads in Perth in Western Australia has formally awarded the Clough/Acciona joint venture the contract for the Stephenson Avenue Extension transportation infrastructure upgrade.

It said Clough’s share is about R1 billion, with the project construction works commencing early in 2022.

The contract will take about two years to complete, it said.

This contract award follows M&R announcing in July this year that the Clough/Acciona joint venture had received preferred proponent status from Main Roads in Perth on this about R2.4 billion road project.

Quality order book

M&R CEO Henry Laas said in September when the group released its financial results for the year to June 2021 that group revenue for the year to June 2022 is expected to “comfortably exceed R30 billion” – a 50% improvement on the revenue for the year to June 2021.

Laas based this forecast on the 12% growth in the group’s order book to an all-time high of R60.7 billion at end-June 2021 from R54.2 billion in the prior year.

“We are extremely excited about the R60.7 billion order book and more so because of the quality of this order book.

“That provides us with the opportunity to experience strong revenue growth but also earnings growth in the 2022 financial year,” he said.

Laas said the order book growth will predominantly come from M&R’s two multinational businesses, the energy, resources and infrastructure (ERI) and mining platforms.

He added at the time that the group has R11.1 billion in near orders, which comprises work that has been secured by the group but has not been signed yet, and means M&R is not able to take it into the order book yet despite the 95% chance of near orders translating into the order book.

Laas said M&R had also submitted R84 billion in bids for Category 1 tenders, which are tenders that have already been submitted and are currently under adjudication.

Commenting on M&R’s record order book, an analyst said earlier this year M&R’s growth recovery “could be quite exciting” provided there are not any hiccups in all the large contracts in the energy, resources and infrastructure division.

Listen to Simon Brown’s interview with M&R CEO Henry Laas in this MoneywebNOW podcast (or read the transcript here):

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No help to us building material companies here in the doldrums left of sunny SA.

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