A new era is dawning for a number of construction firms. Picture: Etienne Giradet
A new era is dawning for a number of construction firms. Picture: Etienne Giradet
JOHANNESBURG - JSE-listed road construction and rehabilitation firm Raubex has made progress with its strategy of looking for growth in more developed international markets with the acquisition of 70percent of Westforce Construction Group in Perth, Western Australia, for A$6.5million (R60m) cash.

Rudolf Fourie, the chief executive of Raubex, said yesterday that the group was encouraged by prospects in Western Australia and the opportunities that could be unlocked through the Westforce acquisition.

Fourie said the civil engineering contractor had grown and diversified since its establishment in 2006 into a multi-disciplined contractor providing services to the power, water, defence, transport, industrial and mining sectors across Western Australia.

Update

In an operational update for the year to February ahead of Raubex’s participation in the Bank of America Merrill Lynch annual conference today, Fourie said the South African environment had not been conducive to growth during the past year.

“Against this backdrop, Raubex has continued to explore opportunities, both locally and internationally, to supplement its revenue streams with current local conditions subdued. Good progress has been made during the second half of the year with regard to international expansion opportunities,” he said.

Raubex bemoaned the lower volumes of both road resurfacing and rehabilitation and road construction and earthworks work released by the SA National Roads Agency (Sanral).

Fourie stressed the importance of Sanral resuming its budget expenditure in line with historical levels in the year ahead to absorb excess capacity in its road construction and earthworks division. He said the division was impacted by the lower volumes of work released by Sanral during the year.

Fourie said the lower expenditure by Sanral would subdue the overall performance of this division in the short term, because of the lower volumes of asphalt and bitumen supplied to the market. He said the road construction and earthworks division had continued to experience tough competitive conditions throughout the year, exacerbated by the lower volume of Sanral work put out to tender.

However, Fourie said the division’s order book improved during the second half of the year.

Contract awards by the Bakwena Platinum Corridor Concessionaire included the construction of the second carriageway of the N4 between the Garankuwa interchange to Brits interchange to the value of R619m and a contract for the upgrading of the P35/1 (R511) interchange for R59m.

Competitive

Fourie said the roll-out of water infrastructure in South Africa had been slow, with extremely competitive tendering conditions experienced for the limited amount of work available.

“With no signs of improvement in the short term, the group made the decision to discontinue the operations of L&R Civils, a company acquired in July 2012,” he said. Fourie said the group had also decided to discontinue the operations of Strata Civils, which specialised in small-scale civil infrastructure projects, particularly in urban environments in the Western and Eastern Cape provinces.

To support further growth in the infrastructure division, the group had entered the niche market of renovating commercial buildings, including shopping malls and hotels, through the establishment of Raubex Renovo, which had secured an order book of R926m. Raubex expects to release its financial results for the year to February on May 7.

Shares in Raubex dropped 2.54percent yesterday on the JSE to close at R21.52.

- BUSINESS REPORT