Engineering and contracting group Murray & Roberts (M&R) has advised that its interim earnings for the six months ended December 31 will be impacted on by the loss of business it had in place with De Beers’ Venetia operation, in South Africa, as well as continued liquidity constraints.

M&R’s mining business in South Africa, Murray & Roberts Cementation, has for more than a decade been working with De Beers on its Venetia project. Recently, De Beers informed the group that it is reviewing its operational plans at Venetia mine and that a significant portion of the works under Murray & Roberts Cementation’s contract will imminently be descoped.

Negotiations in this regard are under way and the impact on the group’s financial results for the 2025 financial year are yet to be determined. This impact will be material considering that the contract represented more than 50% of Murray & Roberts Cementation’s business in South Africa.

Moreover, the group’s mining business in the Americas had a slow start to the 2025 financial year, mainly owing to a later-than-expected and slow ramp-up of new work in Mexico and the US.

This business, in joint venture with Cementation APAC, a new company that was established in Australia to extend the group’s mining services to the Asia-Pacific region, is actively bidding for projects in Indonesia, which, if successful, are expected to start work during the final quarter of the 2025 financial year.

M&R, therefore, expects its 2025 financials to be at least 20% lower than the prior year; however, there is sufficient opportunity in the global mining sector for the group’s core mining businesses to do well into the future, it says.

For example, the company is positioning itself for new work on copper mines in Zambia, which could replace part of the lost Venetia contract revenue, but the timing of this work is such that it will not have much of an impact on the 2025 financial results.

RESTRUCTURING CONTEXT

In the financial year ended June 30, M&R managed to transition from a net debt position at the start of the financial year to a net cash position at the end of the year, as well as reduce its attributable loss from R3.18-billion to R138-million.

M&R’s revenue and earnings from continuing operations increased in the 2024 financial year, as well as its order book, despite the South African operations having been severely impacted by liquidity constraints.

The company had been experiencing delays in procurement and project progress in South Africa, particularly with respect to OptiPower’s projects in the renewable-energy sector.

M&R had to undertake rightsizing of its cost structures following the loss of its Clough and RUC businesses in Australia in December 2022, which were both strong cash contributors.

The group redesigned its operating model and management structure, as well as reduced overhead costs according to the reduced size of the group.

The redesigned structure incorporates four operating companies, each under the leadership of an MD reporting directly to the group CEO.

To reduce its South African debt, the board agreed to a deleveraging plan with a consortium of South African banks, which entailed several measures to repay the debt due to the banking consortium, which peaked at about R2-billion in April 2023.

Through the implementation of the deleveraging plan, M&R reduced its debt owed to the consortium to R409-million as of June 30, which the company has until January 31, 2026, to pay.

M&R also started a process to dispose of noncore assets to help meet its debt payment obligations and to restore liquidity to the group.