Major South African company raises construction mafia alarm

Stefanutti Stocks said it continues to be negatively affected by disruptive and unlawful activities by certain communities and informal business forums in South Africa.

Construction company Stefanutti released its interim results for the six months through August 2024 on Tuesday.

The company reported a meagre 2% increase in revenue compared to H1 2023 and a significant 298.51% drop in total comprehensive income.

However, its earnings per share from total operations grew by 241.32%, swinging from a loss per share of 1.21 cents to earnings of 1.71 cents per share.

Overall, the company swung from a loss of R2.02 million to a profit of R2.87 million – a 241.86% increase.

Specifically, the company’s Inland Region division delivered a strong performance with contract revenue and operating profit of R1.5 billion and R81 million, respectively.

The Coastal Region reflected an improved performance with a significant increase in both contract revenue and operating profit to R1.0 billion and R33 million, respectively. 

The Western Cape’s contract revenue is R427 million, down from 2023, but its operating profit is R31 million, double that of 2023. 

Stefanutti’s Africa Region’s contract revenue was R722 million, down from R1 billion in 2023. However, this division reported an operating profit of R37 million, up from R22 million the previous year.

“These results have been negatively impacted by the recognition of a provision of R30 million due to additional resources required to reach contract completion for the Hyvec JV and difficult operating conditions in Botswana due to excess capacity in the sector,” the company said. 

“The remaining operations are performing to expectation.”

In South Africa, the company said it “continues to be negatively affected by disruptive and unlawful activities by certain communities and informal business forums in several areas of South Africa”.

Stefanutti has had a bumper year so far, with its share price increasing by over 270% in the year to date.

The share price rally started at the beginning of June after the group released its full-year results for the year ending February 2024.

For the first time since 2016, the company reported a profit before tax. In all other years, it reported losses before tax.

Based on these interim results, it seems that Stefanutti is set to report another profit at the end of this financial year.