Stefanutti generates 62% of profit outside SA
STEFANUTTI Stocks generated more than 50 percent of its operating profit from outside South Africa for the first time since its listing in August 2007.
Stefanutti chief executive Willie Meyburgh said yesterday 56 percent of group’s operating profit was generated from outside South Africa in the year to February, but the United Arab Emirates (UAE) added 6 percent to both the group’s turnover and operating profit.
He said the competitive domestic construction market remained under pressure impacted by the lack of decision-making by investors in the private sector and also by procurement departments in the public sector, which was partly the result of the current policy uncertainty in the political environment in South Africa.
“The concern is that this uncertainty will remain for some time, which means it will be quite a challenge to find work,” he said. However, Meyburgh said that the group managed to improve its order book by R300 million from the end of August to R14 billion.
He said the group had generated between 35 and 40 percent of its operating profit from outside South Africa over the past four years and did not expect a repetition in the current year of the high percentage of operating profit from cross-border projects.
Stefanutti reported a 14 percent increase in contract revenue from operations to R10.4bn during the period from R9.1bn in the previous year.
However, the operating loss increased to R451m from R106m, because of a R667m impairment.
Meyburgh said a significant portion of the goodwill had to be impaired, because of “the ongoing reduction in available work in the local building market” which emanated from the current negative outlook in the building sector.
Operating profit improved by 7 percent to R216m from R202m.
Meyburgh said the local building business was still not functioning to its full potential and the group intended to further scale down this business in South Africa.
He declined to quantify the reduction in headcount anticipated from this process, because the group was still involved in negotiations.
But Meyburgh confirmed the group’s headcount had reduced from 12 500 two years ago to 9 200 currently. It continues to experience delays in the award and commencement of contracts and delayed payments from clients, with long-outstanding amounts due from the governments of Zambia and Nigeria continuing to be a source of concern.
There were also delayed payments for projects in South Africa and Mozambique.
Antonia Cocciante, the chief financial officer of Stefanutti Stocks, confirmed this was responsible for the 22.8 percent increase in trade accounts receivable to R2.2bn from R1.8bn.
It also contributed to cash generated from operations declining to R322m from R616m and the group’s overall cash position decreasing to R916m at year-end from R1.16bn in the previous year.
Adjusted headline earnings a share were similar to last year at 90.35 cents compared to 89.86c last year. A dividend was not declared.
Meyburgh said the South African construction market would continue to remain extremely competitive, due to an ongoing lack of public infrastructure spend.
However, he said there were pockets of growth in the short term in the local market.
Shares in Stefanutti Stocks rose 2.86 percent on the JSE yesterday to close at R2.52.