| OPERATIONAL REVIEW |
| |
| FABRICATION & MANUFACTURE |
| |
| World class fabrication and manufacturing capability will stand Murray & Roberts in good stead to play a key role in the indigenisation of capacity to support the pending power station investment program in South Africa. |
| |
 |
| Palello Lebaka, Schalk Burger, Edwin Hewitt, Jaco van den Berg |
| |
|
Revenue |
EBIT before
exceptional items |
| (R millions) |
2007 |
2006 |
2007 |
2006 |
| FABRICATION & MANUFACTURE |
1 323 |
925 |
83 |
63 |
| Manufacture |
1 045 |
779 |
67 |
59 |
| Transport |
278 |
146 |
16 |
4 |
|
| |
View Revenue and EBIT chart  |
| |
| In line with its strategy to dispose of non-core businesses,
Murray & Roberts sold its shares in Murray & Roberts
Foundries Group with effect from 1 April 2007 and
disinvested its remaining shareholding in alloy wheel
maker Borbet Africa. |
| |
| Performance |
Steel fabrication businesses Hall Longmore and Genrec
experienced mixed fortunes through the year. Hall
Longmore delivered an increase in operating profit to
R66 million (2006: R54 million) on revenue of R876 million
(2006: R533 million). Genrec reported a substantial
decline in revenue to R169 million (2006: R248 million)
and in profit to R1,2 million (2006: R3,8 million), reflecting
ongoing difficulties in a market sector not yet benefiting
from the investment cycle.
The award of long-awaited rolling stock refurbishment
projects provided an early boost to Union Carriage &
Wagon (UCW). The UCW Partnership reported an
increase in operating profit to R16 million (2006: R4 million)
on revenue of R278 million (2006: R146 million). |
| |
| Market |
Hall Longmore maintained its leadership position in a
buoyant domestic steel pipe market. The company
successfully completed the manufacture of pipes for the
Vresap project and the Berg River scheme and was
awarded major contracts to supply piping for the Pande
gas pipeline in Mozambique and the Western aquaduct
for Ethekwini Metro in KwaZulu Natal.
Hall Longmore has embarked on a R180 million capital
expenditure program to de-bottleneck its operations
and meet growing market demand. The company
strengthened its leadership capacity in mechanical,
electrical and metallurgical engineering during the year.
Genrec has been undergoing a significant transformation
for some time to strengthen its operational efficiencies
and risk management. The company is currently reengineering
its operational processes to benchmark
costs, quality and delivery against global standards.
Regrettably, Genrec experienced a fatality in October
2006. The company has strengthened its safety
leadership and practices and this is reflected in the
achievement of 500 000 man-hours without a lost time
injury between October 2006 and July 2007.
UCW was awarded the three year Ore Line locomotive
project in partnership with Mitsui as the main contractor
and Toshiba as systems supplier. This follows the award
in 2006 of the similar CoalLink project and will involve the
design, build and systems integration of an initial 32 Ore
Line locomotives. Both projects are part of the Spoornet
Main Line Locomotive Investment Program.
In December 2006, UCW received a letter of intent from
the South African Rail Commuter Corporation for the long
overdue locomotive and rolling stock upgrade program.
Work has commenced on the three year project involving
the refurbishment and upgrade of 506 10M4 coaches.
On 12 July 2007, UCW was awarded the contract to
assemble and test 81 vehicles for Gautrain. An upgrade
of facilities for the project is scheduled for completion in
time for the start of assembly work in August 2008.
Official training by Bombardier will facilitate valuable
technology and skills transfer to UCW. |
| |
| Prospects |
Hall Longmore starts the new year with an order book of
R420 million and the prospect of ongoing growth in the
steel pipe market driven by high oil demand.
The bulk of Genrec's R226 million order book comprises
repeat orders in its selected markets. Genrec retains
significant capability in the power sector, having built the
Matimba power station in the 1980s, and is well positioned
to play a leading role in Eskom's build program.
UCW's order book has increased significantly to
R2,6 billion as a result of the major long term projects it
has secured. |
Operational review