Stefanutti Stocks interims: Kusile windfall boosts recovery but going-concern risk persists

Key topics:Profit rebound: Earnings surge on improved operations; Kusile settlement unlocks restructuring.Record order book: R13.4bn pipeline strengthens medium-term visibility across regions.Going-concern warning: Liquidity imbalance, negative working capital and weak cash flow remain critical risks.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Stefanutti Stocks has posted a much-improved interim performance for the six months to 31 August 2025, with profitability rebounding sharply and the group securing a record order book. The turnaround has been materially supported by the near-finalised settlement of long-running claims at Eskom’s Kusile power station and the conclusion of a multi-year restructuring plan.Yet, despite the operational recovery, the company continues to flag material uncertainty regarding its ability to continue as a going concern, with liquidity constraints and a significant working-capital deficit weighing heavily on its financial position.Profitability improves as restructuring nears completionGroup profit surged to R48 million (2024: R3 million), demonstrating significant operational improvement. EBITDA strengthened to R232 million, up from R166 million, while earnings per share rose to 28.96 cents (from 1.71 cents). Headline earnings per share increased to 34.54 cents (from 13.23 cents).Contract revenue from continuing operations edged up to R3.7 billion, reflecting stable activity across core markets.A key development was the finalisation of the long-disputed Kusile contract claims. Although the Dispute Adjudication Board had earlier awarded Stefanutti Stocks R685 million (ex-VAT) for Claim 5 alone, the group and Eskom reached a mutual release settlement of R580 million (ex-VAT) covering all outstanding claims. The funds are due by 12 December 2025.This settlement has been vital to the unwind of the company’s legacy restructuring programme. Following the full settlement of its prior lender facility on 31 October 2025, the historic Restructuring Plan was formally terminated. The company has since secured a new five-year, R850 million term facility with Standard Bank, with at least 80% of the Kusile proceeds earmarked for repayment by February 2026.Record order book supports future work visibilityThe group’s order book expanded sharply to R13.4 billion (February 2025: R8.6 billion), the highest in recent years.Notably, R4.2 billion of the pipeline relates to cross-border contracts, and R10.3 billion is scheduled for execution beyond February 2026—providing rare medium-term visibility in a sector often marked by volatility and short project cycles.Operationally, both major domestic divisions improved. The Inland Region delivered strong growth, with revenue rising to R2.0 billion (from R1.5 billion) and operating profit increasing to R153 million (from R81 million). The Coastal Region reported a smaller but still improved operating profit of R44 million (from R33 million).Safety performance also strengthened, with the Lost Time Injury Frequency Rate falling to 0.04. The group maintained its Level 1 B-BBEE contributor status.Liquidity pressures and working-capital imbalances persistDespite these positives, Stefanutti Stocks’ balance sheet remains stretched. As at 31 August 2025, current liabilities exceeded current assets by R1.24 billion, only a marginal improvement from February’s R1.30 billion shortfall. The accumulated loss of R1.013 billion continues to exert pressure on equity and funding flexibility.Management acknowledges that these conditions—combined with tight liquidity—continue to constitute a material uncertainty over the company’s ability to continue as a going concern, even after the Kusile settlement.Cash flow deteriorated sharply, with cash consumed by operations of R39 million, compared with R403 million generated in the prior period. A R239 million working-capital outflow, driven primarily by higher trade receivables, eroded cash reserves, leaving the group with R336 million at period-end (February 2025: R470 million).Mixed regional performance and delayed asset salesThe Western Cape Region underperformed, with contract revenue falling to R378 million (from R427 million) and operating profit sliding to R20 million (from R31 million) due to delays in project awards.The Africa Region continued to report losses, albeit at a reduced level—an operating loss of R7 million (2024: R37 million)—as revenue contracted sharply to R412 million from R722 million. Award delays led to under-recovery of overheads and rising holding costs.The disposal of non-core assets and the disposal group (including SS Mozambique) is progressing slower than planned due to weak market conditions, resulting in a R29 million loss for the period..Read the results in full by downloading the PDF below

Stefanutti Stocks interims: Kusile windfall boosts recovery but going-concern risk persists

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