Johannesburg - Construction company Wilson Bailey Holmes-Ovcon (WBHO), which is still defending a Competition Tribunal claim over the building of 2010 Soccer World Cup stadiums, has seen a leap in income thanks to its operations outside SA.
However, the company’s operating profit came in lower as it faced margin squeezes in Australia and four projects ran at a loss.
In the company’s results commentary, posted to shareholders on Monday, the listed firm said revenue from continuing operations climbed 15 percent to R29.5 billion in the year to June. However, this was undepinned by growth of 23 percent from its Australian operations, and 21 percent from African work outside of SA.
It notes “moderate” growth of 3 percent was achieved by its local unit.
During the 2015 financial year, WBHO sold its interests in Bela-Bela, a quarry in Botswana, as well as Dywidag Systems International (DSI).
Despite the increase in revenue, its operating profit dropped 23 percent to R793 million because of a margin drop at its Australian units. The company noted 4 loss-making projects within its Australian civil businesses, combined with poor trading conditions in general, were the main contributors behind the disappointing operational performance.
WBHO’s African units improved operational performance “marginally,” gaining from R779 million to R783 million as “healthy profitability within the building and civil engineering division [was] largely offset declining margins within the roads and earthworks division”.
Because of poor trading conditions in Australia, WBHO has impaired these units by R50 million, and also wrote down Monaco Hickey, a business focusing on the extremely competitive Australian pharmaceutical and healthcare markets, by R57 million. It has also impaired property plant and equipment at its Australian units by R54 million.
Full earnings per share increased 35 percent to 1 029c a share, while full headline earnings per share increased 0.2 percent to 1 175c a share.
However, disappointing performance from Australia, along with impairments, led to earnings per share from continuing operations dropping 28.5 percent to 906.6c, while headline earnings per share from continuing operations - a key measure of performance - dropped 13.5 percent to 1 105.7c.
Despite the trying conditions, WBHO grew cash from operations to R2.6 billion compared with R797 at the end of the last financial year.
Its order book gained 3.5 percent thanks to increases to the order books of the group’s building divisions locally, as well as in the rest of Africa and Australia. However, the roads and earthworks book declined 25 percent year-on-year, to R3.7 billion.
“The heavier weighting toward lower margin building and roadwork included in the group’s book means margins are likely to remain at the lower end of the group’s targeted range over the short to medium term.”
WBHO declared a 258c dividend, up from 233 last year.
IOL