Stefanutti hopes its problems are past
It wants return to profitability
JSE-LISTED Stefanutti Stocks, the multi-disciplinary construction company operating in South Africa, sub-Saharan Africa and the United Arab Emirates, said problem projects and write-offs are behind them as it wants to return the business to profitability.
The group encountered a value charge of R139 million relating to the voluntary settlement agreement concluded with the South African government and six other JSElisted construction groups to transform the industry and goodwill of R155m relating to the acquisition of Cycad Pipelines.
Chief executive Willie Meyburgh said one of the issues the construction companies had to deal with over the years was the fact that the industry had remained flat.
Meyburgh said the group’s performance for the year-end in February reflected the challenging trading environment which saw companies scaling down on operations and restructuring in accordance with the availability of work.
“We are starting a slight improvement in the current year and, with us clearing those problem projects, we expect to report better results in the next reporting period,” said Meyburgh.
The results were also negatively impacted by a foreign exchange loss of R81m due to the strengthening of the rand during the year and the weakening of currencies in the African regions in which Stefanutti Stocks operates.
Meyburgh said that the group continued to experience delayed payments from clients on contracts.
In the results, the group reported a headline loss of 79.3 cents a share.
It said that had the one-off charge relating to the settlement agreement not been taken into account, the headline earnings per share would have been 89.86c, which is similar to that reported in the previous year of 89.2c.
The group’s orderbook currently stands at R14 billion of which R4.4bn arises from work beyond South Africa’s borders. Capital expenditure for the year amounted to R272m, up from R157m, of which R156m relates to the mining services operation. The group reported an operating loss of R106m for the year.
Meyburgh said the group continued to experience delayed payments from clients on contracts.
“However, the increase in excess billings over work done to R1.2bn resulted in cash generated from operations increasing to R616m, up from R30m reported in 2016. This includes an inflow from working capital of R274m,” he said.
As a consequence, the group’s overall cash position has increased to R1.16bn, up from R851m a year before.
The group added that owing to a reduction in infrastructure projects and delays in the awarding of contracts, revenue of the Roads, Pipelines & Mining Services business unit declined to R2.2bn, down from R2.6bn with a reduction in operating profit to R162m.
Meyburgh said although the market continues to be competitive there remain potential growth areas in mining surface infrastructure, marine, petrochemical tank farms, water and sanitation treatment plants, and residential and mixed-use building projects will provide opportunities for all business units.
“The group continues to seek opportunities in southern Africa and, on a more selective basis, further afield in sub-Saharan Africa, to diversify the business,” said Meyburgh.
The board did not declare a dividend for the year.
Stefanutti shares rose 1.8 percent on the JSE yesterday to close at R3.40.