Ste­fanutti gen­er­ates 62% of profit out­side SA

The Star Late Edition - - NEWS - Roy Cokayne

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.

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