Raubex is on the road to recovery as tenders are picking up again
CAPE TOWN – The tender environment in the local construction industry has improved after it came to a standstill over three months of lockdown, Raubex chief executive Rudolf Fourie said on Monday.
Speaking in a presentation where the road transport, infrastructure and construction materials group reported a 145.4 percent slide in headline earnings to a loss of 26.6 cents a share in the six months to August 2020, Fourie said the group was encouraged by recent contract awards and they looked forward to participating in the government’s plans to stimulate the economy through infrastructure spending.
The order book increased to R11.74 billion from R9.08bn in the first half of the 2020 financial year and the the group anticipated receiving some big tender awards before the end of the year, said Fourie.
He said that at this stage contraction tenders were coming out of the SA National Roads Authority in the award of public-private Partnership (PPP) contracts, while in the private sector there was a great deal of housing building, and work emanating from the renewable energy sector, Fourie added.
Some of the PPP work that had come out to tender was for government offices in Gauteng, a water project in KwaZulu-Natal, a hospital in the Western Cape and to build schools in Gauteng. These projects were each worth close to R1bn and there was talk of more PPP work coming to the market soon, he said.
Raubex was well positioned to participate in the local renewable energy, transport and human settlements projects.
He said the group’s internationally sourced order book currently amounted to about 10 percent of the order book, compared with about 30 percent in prior years, because the group had adopted a more conservative approach to tendering for work in the rest of Africa. “Post Covid-19 we believe it will be more difficult to operate elsewhere in Africa,” he said.
Raubex recently completed its loss-making Douala Grand Mall project in Cameroon, where border difficulties and Covid-19 restrictions resulted in an operating loss.
The international division’s operating profit fell 99.2 percent to R0.5m after operations were severely impacted by lockdowns in Africa, and the order fell to R252.9m from R681.5m.
The infrastructure division reported a R18.7m operating loss versus a R77.3m operating profit at the same time last year, and the order book was stable at R3.12bn. About R25bn of potential new work had been priced by the division, said Fourie.
The materials handling division’s operating profit fell 26.1 percent to R106.4m, and demand was currently exceeding expectations in the commercial quarry operations, which Fourie believed was being driven by home building, while the coal operations had performed relatively well over the interim period.
In Australia, where there has been no Covid-19 lockdown, revenue increased 144.7 percent to R526.9m and operating profit was up 56 percent to R36.1m. Its order book increased to R870.4m from about R450m.
Raubex’s revenue was down 10.5 percent to R3.94bn, but operating profit was down 90 percent to R21.7m. Cash generated from operations increased 72.4 percent to R715m.
Dividends were resumed after no final-year dividend was declared because of the Covid-19 uncertainty, and an interim dividend of 24c was declared, up from 22c for the same time last year.
Fourie said the six-month period had proven the resilience of the group and commitment of its management and employees.
Raubex shares rose 1.48 percent to close at R20.52 on the JSE on Monday.