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Manufacturing Rescues M&R

INDUSTRIAL construction firm Murray & Roberts (M&R)’s business has a “thin” order book but management is optimistic it will continue picking up “small but profitable” projects along the way.

CEO Canada Malunga says although his group has a relatively thin order book, its manufacturing business chipped in with volumes.
Malunga says the manufacturing division lifted capacity utilisation to current levels of around 40% from what he described as an “absolutely awful” 10% prior to dollarisation.
He said Proplastics saw 40% of total volumes being sold in the year.
The group’s pipe business is enjoying business from local authorities keen on improving water distribution in all urban centres after years of neglect.
Management is also optimistic that M&R is well placed to take on opportunities that may arise in the market.
“We are well-placed to take on opportunities and we are not intimidated by the appearance of other players on the market,” Malunga said.
Malunga’s comments come on the back of news that South African construction companies were in town scouting for opportunities this week.
The group’s core construction business improved post dollarisation but August, according to Malunga, was the group’s best month so far.
Across the border, M&R’s Malawian operation posted a loss owing to “stiff competition, foreign currency shortages and severance packages to staff”.  
Malunga hopes once government resuscitates suspended road and rail projects, his group could cash in on those developments but is giving it six months to a year.
Malunga remained optimistic throughout his presentation and said although the dust on the political front might take longer to settle, companies can continue doing business in a stable environment.
Management also sees opportunities in water and sewer reticulation business. M&R’s contracting business will spend US$5 million by June next year in capital expenditure to replace equipment and machinery while another US$2 million will be spent on the manufacturing business as well.
The group hopes the economy will experience some measure of “resurgence” six months to a year from now, a development that will buoy its business.
The group said: “The new political set up has brought about hope and exciting opportunities for the country. The current business environment and anticipated growth present a lot of opportunities for the group. The group is pursing various initiatives centred on the infrastructure-rebuilding programme in Zimbabwe.”
M&R made a profit before tax of US$1,2 million in its trading year to June while earnings per share stood at 0,90 cents. Gross profit rose by 24%. Return on equity grew by 12% in the same period.


Chris Muronzi

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