Stefanutti HEPS down 20%

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15-05-2012
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Moneyweb
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Expects construction to recover only in the medium term.

Construction company Stefanutti Stocks Holdings (JSE:SSK) has reported a 20% decline in diluted headline earnings per share for the year ended February 2012 from 176.04 cents a year ago.

Revenue was up 15% to R8.068 billion, but operating profit before investment income was 19% lower at R359.0 million and profit for the year declined to R264.2 million from R333.0 million. The company said the reduction in profits was a consequence of a market defined by delayed contract awards, contract cancellations, lower margin projects and some loss-making contracts.

Contract revenue of R8.0 billion showed an increase of 15.9% over the previous year.

The group's current order book stands at R9.3 billion.

A final gross dividend of 12 cents per share was declared, making a full year dividend of 24 cents compared with last year's final dividend of 25 cents and total dividend of 45 cents.

Stefanutti said the effect of an extremely competitive trading environment coupled with a volatile global market is clearly reflected in the group's results.

"The results are nonetheless satisfactory under the circumstances," it said.

The group's interest-bearing liabilities have increased to R392 million from R254 million due to additional funding required for capital expenditure mainly by the Roads & Earthworks and Mining Services Business Units and the expansion of the group's offices, resulting in greater depreciation and finance costs. The increase in provisions arose from the increased contract activities and nature of certain contracts.

The group generated R900 million from its operating activities during the year of which R804 million was consumed by working capital, as a result of an increase in trade receivables and work in progress balances.

Looking ahead the group said the construction market is expected to recover only in the medium term and future growth will depend on the confidence of mining houses to invest in capital projects, the developments in renewable energy, the general health of the global economy and future government capital expenditure.

In addition, since 25% of the group's turnover and 33% of the operating profit is generated from outside SA, continued expansion into the sub-Saharan continent remains a priority, which will continue to build on existing strong structures and relationships.

The infrastructure plans of the SA government, at a stated value of R845 billion, have been approved and budgeted for over the next three years which is promising. Stefanutti Stocks will tender on these projects as and when they become available.

It believes it is well-positioned to take advantage of a number of anticipated opportunities as they occur.