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Tuesday, May 19, 2009 |
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Stefanutti Stocks continues to build strong growth
:: News
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In an active and highly successful year to February 2009, JSE-listed engineering and construction group Stefanutti Stocks more than doubled revenue to R6,3 billion and net profit after tax to R319,4 million. The group positioned itself in the first-tier construction sector in South Africa following the acquisition of Stocks Limited during the year (the “Stocks merger”). Marking another milestone Stefanutti Stocks was also ranked by an independent survey as the top black empowered group in the construction industry.
Including the Stocks merger for seven months the results reflected growth on all fronts. Headline earnings of R299,3 million translated into headline earnings per share (“HEPS”) of 185,4 cents, a significant increase from 103,7 cents for the previous year. Normalised HEPS of 202,6 cents showed an even more substantial increase of 93%, up from 104,8 cents. Earnings per share grew 78% to 184,3 cents from 103,3 cents despite more shares in issue following the Stocks merger.
CEO Willie Meyburgh says effective implementation of an early integration strategy is paying off with the merger of the two groups running smoothly. “The inclusion of Stocks’ businesses in the group has already yielded benefits including economies of scale, enhanced efficiencies and critical mass. These advantages are boosting bottom line, widening the group’s international footprint and opening greater access to infrastructure work in the Gulf region as well as bolstering management, specifically in the Building business unit.”
He says the strong performances across the group were buoyed mainly by infrastructure development in Southern Africa, Eskom’s expansion plans and projects related to the 2010 World Cup Soccer.
“The primary growth driver for the group was the Structures unit which encompasses our geotechnical, concrete and marine construction operations,” says Meyburgh. A number of significant contracts were secured during the year. “We are involved in all major expansion work currently underway in joint venture,” he points out, referring by way of example to the Kusile Power Station, the Ben Schoeman Dock in Cape Town Harbour, the Gauteng Freeway Improvement Project and the Sikhupe International Airport in Swaziland.
Vindicating the group’s efforts to bolster the Building unit with Stocks’ building business, revenue increased substantially from major projects. These include projects in partnership such as the OR Tambo and Cape Town International Airports and Sol Kerzner’s ‘One & Only’ resort in Cape Town, completed two months ahead of schedule.
Roads & Earthworks reaped the benefits of a Bus Rapid Transit contract in the centre of Johannesburg. “The new asphalt division is proving a wise addition and has made a solid contribution to the unit’s revenue with good returns,” Meyburgh adds.
The Mechanical, Electrical & Power and Mining Services units also made solid contributions for the year. Meyburgh says Mining Services fended off the slowdown in mining in South Africa through a number of large contracts for waste disposal and re-mining programmes.
The operation in the Gulf region, in partnership with local companies, maintained its healthy performance notwithstanding mass cancellation of large projects in Dubai. “To capitalise on the US Dollar income stream the group established a formal office in Dubai during the year as a base for regional expansion,” says Meyburgh, who still believes this region will provide further growth opportunities in for instance, Abu Dhabi, Qatar and Oman.
While Meyburgh recognises that deterioration in the markets has undoubtedly damped prospects, he says fortunately the group’s current order book remains encouraging. “Our operations are firmly aligned to growth markets such as infrastructure development and power.” Within South Africa he sees certain sectors of mining as less affected by the commodities pricing decline and says the group will target those sectors for work. He also points to Southern Africa and the Gulf, where Stefanutti Stocks is an established supplier, as growth nodes.
He concludes that the group will take advantage of the current slowdown to consolidate following the recent acquisitive and organic growth.
Stefanutti Stocks’ share closed yesterday at R7,75.
Issued by:
Nicole Katz/Michèle Mackey
(011) 325 5944/082 497 9827
On behalf of: Stefanutti Stocks Holdings Limited
Willie Meyburgh, CEO
011 571 4300
Share Code: SSK
Issue date: 19 May 2009
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