Claims hit Murray & Roberts profits
By Chris Sleight28 January 2011
Murray & Roberts, one of South Africa's largest contractors, has issued a profit warning, saying the slow resolution of claims and tough market conditions means it is likely to report a loss for the half-year to 31 December 2010.
The company said that problem areas included its work on Dubai Airport in the UAE and the Gautrain high-speed rail link and Medupi power station, both in South Africa. "(These) are public sector projects that have all suffered significant increases in their scope of works, over and above what had originally been designed and contracted. This has resulted in significant delay and disruption with additional costs against which the company's clients have certified only limited payment to date," said a statement from Murray & Roberts.
Group chief executive, Brian Bruce added, "I feel the resolution of these matters with our clients has been made more complex than necessary, especially as the cause of the increased scope in each case is no fault of Murray & Roberts or its partners. I think it is fair to say, that while Murray & Roberts is challenged by the cash flow consequences of this state of affairs, the company and its people have risen above these challenges and continue to deliver diligently on their contracted responsibilities."
Mr Bruce added that in the future the company would lower its exposure to the problems posed by outstanding payments.