Stefanutti shares increase despite dented earnings

Shares in Stefanutti Stocks rose 4.88% on Thursday after the construction group reported that its earnings in the year to February had been dented by deteriorating market conditions.

Johannesburg - Shares in Stefanutti Stocks rose 4.88 percent yesterday to close at R4.30 after the listed construction group reported that its earnings in the year to February had been dented by deteriorating market conditions and additional costs incurred by a discontinued operation.

This followed Stefanutti Stocks reporting that both its headline earnings a share and earnings a share were expected to decrease between 5 percent and 25 percent compared with the previous year.

Read: Stefanutti climbs as building unit does about-turn

Restated earnings a share from continuing operations were expected to match the previous year or be 10 percent lower.

The group expects to report headline earnings a share of between 107 cents and 84.5c for the year to February compared with 112.6c in the previous year.

Earnings a share, comprising both continuing and discontinued operations, were expected to be between 109.1c and 86.1c, compared with 114.8c for the previous year.

Restated earnings a share from continuing operations were expected to be between 150.4c and 135.4c compared with 150.4c previously.

One of the key aspects contributing to the lower earnings was the deteriorating market conditions within the electromechanical sector in the Middle East, it said.

Stefanutti Stocks said the group had sold its 49 percent investment in Zener Steward Electromechanical and the results for the year to February would be restated to exclude Zener from continuing operations.

It said the costs attributable to the discontinuance of Zener included the carrying value of the investment, losses incurred during the period and the effects of the weakening of the rand against the United Arab Emirates dirham.

Stefanutti added that additional costs were incurred in the reporting period to resolve ongoing disputes with customers from the discontinuation of the operations of the power divisions.

The power division had already been classified as a discontinued operation in Stefanutti Stocks’ financial results for the year to February last year.

Stefanutti Stocks said it had disposed of investment property in the year to February this year, resulting in a profit that was reversed in the calculation of headline earnings a share.

All other businesses had performed in line with management’s expectations, it said.

Stefanutti Stocks anticipates publishing its annual financial results on May 19.

BUSINESS REPORT