M&R SHARE PRICE TANKS ON PROFIT WARNING

Moneyweb

The group expects HY financial results to be down at least 100%.

The share price of JSE-listed construction and engineering company Murray & Roberts (M&R) dropped by 35% to R4.28 on Monday morning, following its cautionary announcement predicting a 100% decline in its financial results for the six-month period ending 31 December 2022.

According to the Sens statement issued on Monday, the disruption in supply chain delivery and delay in project milestone payments continue to persist, with several projects progressing more slowly than anticipated. This, it notes, is affecting margin and working capital requirements.

The company says margin deterioration was recently recorded at the Traveler project in the United States and the Waitsia project in Australia, both of which it expects will be close to completion by the end of the 2023 financial year.

The group previously disclosed in its stakeholder report that the delivery of its order book is increasingly being disrupted in the current environment and that increased levels of working capital are required to address the dislocation in project cash flows.

“The group has a reasonable degree of certainty that the margin deterioration described above will result in the financial results for the six-month period ending 31 December 2022, to be at least 100% down on the previous and corresponding reporting period.”

Its board of directors does not have reasonable certainty on the earnings per share ranges, but M&R says it will publish an updated trading statement once there is more certainty.

The group notes that its working capital requirements are especially severe in its Energy, Resources, and Infrastructure business platform. It says it is currently reviewing its strategic options to address the platform’s near-term working capital needs.

As the developments described in the statement may have a material effect on the share price, M&R shareholders were advised to exercise caution when dealing in the company’s securities until further announcements.