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31 May 2022

Construction group Stefanutti Stocks has posted an operating loss of R99 million for the financial year ended February 28, a widening of the restated R55 million operating loss for the year ended February 28, 2021.

CEO Russel Crawford explains that the group delivered an improved performance on a normalised basis, in what remains a challenging trading environment.

A normalised operating profit of R198 million for the year excludes abnormal and non-operational items such as restructuring costs, legal fees, fair value adjustments and impairments of assets. Stefanutti reported a loss a share of 248.27c, against a loss a share of 171.62c in the prior financial year.

Stefanutti’s order book stands at R5.3 billion, while it had a cash position of R409 million at year-end. Crawford says the group’s results continue to be negatively impacted on by Covid 19 and the slow adjudication and award of tenders, especially in the public sector.

Stefanutti had been reorganising its operations into regions, barring the Mechanical & Electrical business, now called Mechanical Electrical Piping, effective March 1, 2021. The regions comprise Inland, Coastal, Western Cape and Africa.

The Inland region division comprises building, civils, geotechnical, materials handling, tailings management, roads and earthworks projects. In the year under review, its operating profit was impacted by an impairment of R21 million and fair value adjustments of R11 million, relating to the revaluation of land and buildings, plant and equipment, resulting in an operating profit of R86 million.

Stefanutti’s contract mining discipline was wound down in October 2021 and is disclosed as a discontinued operation in the year under review. Crawford says the civils, roads and earthworks disciplines remain profitable and are performing to expectation.

The Inland order book was R2.2 billion at year-end.

The Coastal region’s operating profit of R3 million was negatively impacted by civil unrest in July 2021. The order book for the division stood at R1.1 billion, for building, civils, roads and earthworks.

The Western Cape region, focusing on building and civils work, posted an operating profit of R54-million in the year under review, which was a significant improvement on the restated operating profit of R4 million reported in the prior year.

Crawford says the region’s building discipline performed above expectation and opportunities are abundant for water, wastewater treatment plants, framework agreements and private sector commercial, retail, industrial and warehouse developments. The Western Cape order book was R1.1 billion at year-end.

The Africa region, comprising multidisciplinary services in Botswana, eSwatini and Zambia, generated an operating profit of R102 million, with all operations performing profitably. Africa’s order book was also R1.1 billion.

The Mechanical Electrical Piping division, comprising mechanical, electrical, instrumentation and oil and gas projects, reported an operating loss of R78 million in the year under review, partly owing to a R15 million fair value adjustment relating to a property held for sale.

Crawford explains this business has been severely impacted by the pandemic and delayed plant maintenance and upgrade projects. However, rising opportunities in the oil and gas space are good signals of improvement in the sector.

More opportunities exist in renewable energy, industrial projects, clean fuels, tank farms, data centres, mining infrastructure and plant upgrades, which Stefanutti is actively pursuing.

Meanwhile, Stefanutti’s civil claim related to the Green Point Stadium has been amicably settled by the parties involved. Crawford concludes that the company remains focused on successful implementation of a restructuring plan and returning the group to profitability.

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