Stefanutti continues to implement restructuring plan

Russell Crawford, CEO of Stefanutti Stocks
Russell Crawford, CEO of Stefanutti Stocks.

Construction company Stefanutti Stocks has released its results for the year ended 28th February 2021, reporting reduced contract revenue from continuing operations to R5 billion (restated February 2020: R7.2 billion) with an operating loss of R111 million (restated February 2020: R1 022 million).

The company’s earnings and headline earnings per share for continuing operations were reported as a loss of 186.16 cents (February 2020: 662.00 cents) and a loss of 188.32 cents (February 2020: 644.10 cents) respectively.

The group’s order book for continuing operations is currently R5.5 billion, of which R2.1 billion arises from work beyond South Africa’s borders.

Russell Crawford, CEO of Stefanutti Stocks, said that the group continues to progress the implementation of the restructuring plan, the purpose of which is to put in place an optimal capital structure and access to liquidity to position the group for long-term growth.

The plan is focused on the sale of non-core assets, underutilised plant, and equipment and of certain operations, as well as internal restructuring initiatives required to restore optimal operational and financial performance, amongst other matters. Crawford added that shareholder approval was received for the sale of the Clayville properties and Stefanutti Stocks Materials Handling & Tailings Management sub-divisions.

In accordance with the plan, the lenders had provided the requisite funding and converted the short-term funding agreement into a term loan on the 1st of July 2020, which terminates on the 28th of February 2022. Shareholders are further advised that the group, on the 25th of May 2021, reached an agreement with the lenders to extend the current capital repayment profile of the loan.

Management has made considerable progress in reconfiguring the group’s organisational structure to improve operational performance and decrease overhead costs, including reducing headcount by 26%. This is an ongoing process which continues as the aspects of the plan are being implemented” says Crawford.

Review of operations

Construction and mining’s contract revenue from continuing operations decreased to R3.7 billion (restated February 2020: R4.7 billion), declaring an operating profit of R71 million (restated February 2020: operating loss of R383 million). According to Crawford, a decision was made to wind down the contract mining sub-division, with only one small contract remaining active, which will be completed by October this year.

Opportunities do still exist for this business unit in transport infrastructure, water and wastewater treatment plants, mine infrastructure and in the alternate energy sector, while the proposed National Development Plan (NDP) will offer other potential opportunities.”

Construction and mining’s total order book as of February 2021 was R3.6 billion (February 2020: R4.6 billion).

The building business unit was unable to work for three months during the reporting period due to the national lockdown and the Covid-19 safety regulations. This resulted in contract revenue from continuing operations decreasing to R1.1 billion (restated February 2020: R1.7 billion), with an operating loss of R31 million (restated operating loss February 2020: R514 million).

This business should also potentially benefit from the NDP, together with commercial, retail, industrial, warehouse and factory opportunities in the private sector in Gauteng, KwaZulu-Natal and Western Cape,” said Crawford.

He added that the Mozambique division’s order book is currently under pressure, impacted by the ongoing unrest in the northern province gas fields expansion projects. “The division is, however, pursuing other opportunities in the office, residential, factory and surface mine infrastructure in the private sector.”

Building’s total order book as of February 2021 was R2.0 billion (February 2020: R2.3 billion).

Mechanical & electrical’s contract revenue decreased to R270 million (February 2020: R897 million), with an operating loss of R64 million (February 2020: R25 million).

The business was severely impacted by the effects the pandemic has had on global commodity prices, resulting in major plant maintenance and upgrade projects being put on hold. However, opportunities in the traditional petrochemical sector for the Oil & Gas division are showing signs of improvement.”

Mechanical & electrical’s total order book as of February 2021 was R136 million (February 2020: R328 million).