Investment conference pledges to benefit construction sector, says Stefanutti Stocks
R134bn promised at investment summit
STEFANUTTI Stocks, the listed construction group, believes the R134 billion in investment pledges made at President Cyril Ramphosa’s investment conference should benefit the construction industry.
Willie Meyburgh, the chief executive of Stefanutti Stocks, said yesterday that the group was already working on a brownfields project in East London to expand Mercedes-Benz’s body shop.
Meyburgh said Stefanutti’s contract was valued at R1.2bn and was scheduled to be completed by the middle of next year.
Mercedes-Benz pledged to invest a total of R10bn in its East London plant at the investment conference.
Meyburgh said Stefanutti had also priced a distribution centre for Amazon, which was expected to be awarded early next year, with the project valued at between R600 million and R700m.
He said they were also optimistic there would be some benefit to the various divisions within Stefanutti from the government’s stimulus package.
“The recent medium term budget policy statement mentioned a number of R92.5bn. We are not sure where or when it is allocated.
“We would like to believe that in the Budget speech there will be more of that. So its not all bad (news) and in the medium- to longer-terms we would like to believe that these things are going to materialise,” he said.
Meyburgh said Stefanutti also had several longer-term opportunities, including the clean fuels programme, a planned liquefied natural gas (LNG) project in Mozambique and the Lesotho Highlands Water Project.
He said they understood from a market survey that Sasol and others would start to invest in the clean fuels programme from 2020 while a decision on the LNG plant in Mozambique was anticipated in June next year, although it was originally expected in June this year. Meyburgh said some infrastructure work on the ancillary works of the Lesotho Highlands Water Project was taking place and people were being relocated from the site “so there is some activity”.
Meyburgh said Stefanutti’s current order book declined to R12.8bn in the six months to August, which was a two-year low. However, Meyburgh said there were various cross border opportunities and further afield in road and bridge construction, bulk pipelines, marine and office buildings.
Meyburgh said 30 percent of Stefanutti’s revenue was from outside South Africa but it accounted for 50 percent of the group’s profits.
An increasing trend of clients delaying payments was also putting pressure on the group’s working capital. Despite the tough South African construction environment, the group’s operating profit improved, he said.
Stefanutti yesterday reported a 1 percent decline in revenue to R5.13bn in the six months to August from R5.19bn in the previous year. Operating profit improved by 14 percent to R124.8m from R109.8m. Headline earnings a share grew by 46 percent to 60.30c from 41.41c. A dividend was not declared.
Shares in Stefanutti rose 7.02 percent on the JSE yesterday to close at R3.20.