Murray & Roberts’s share price plunged 40% yesterday after it said its financial results to December 31 were expected to fall at least 100% as its international engineering projects are being affected by global supply chain issues.
The price was trading 39.58% lower at R4 by around midday, after it had steadily declined from R13.54 a year ago.
Among comments elicited by the falling share price on Twitter was Carles Boles (@CharlesBoles), who said at M&R’s September 1, 2022 results presentation: “The CEO said the recent slide in share price was inexplicable. Today (17 October) trading update said 1H2023 (first half of the year) earnings will be down at least 100% and there are working capital funding issues. Not so inexplicable it seems?”
Simon Brown (@SimonPB) said: “Murray & Roberts (have) more bad news, really bad news. Stock off 36% on latest SENS (Stock Exchange News Service). No not buying, heck not even sure if they survive.”
Yesterday’s bleak outlook comes after M&R reported in June that delivery of its order book was being disrupted by supply chain issues, and that increased levels of working capital were required to address the dislocation in project cash flows.
These problems had since persisted with a number of projects progressing slower than planned, cutting margin and increasing working capital requirements.
“Margin deterioration has recently been recorded at the Traveler project in the US and the Waitsia project in Australia, both of which will be close to completion by the end of financial year 2023,” the group said in a trading statement yesterday.
M&R said it was not certain at this stage about the earnings per share ranges, but an updated trading statement would be published once there was more certainty on these ranges.
Working capital requirements were especially acute in the Energy, Resources & Infrastructure business platform and options were being reviewed to address this platform’s near-term working capital needs.
The Traveler project, according to an online search, involves the engineering, construction and commissioning of a project in the Pasadena industrial complex, Texas to deliver a 28 000 barrels per day alkylate facility that produces high octane alkylate for the fuel blending market.
The Waitsa project in Australia involves construction of a new gas processing plant and pipelines that will draw from up to eight production wells phased over a 15-year life cycle and to convey the gas to the Bunbury natural gas pipeline. Both projects are being done by M&R’s Australian contracting unit, Clough.
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