Raubex Group was bidding on an “unprecedented” increase in new tenders for road construction worth about R17 billion. Photo: Supplied
CAPE TOWN – Raubex Group was bidding on an “unprecedented” increase in new tenders for road construction worth about R17 billion, Raubex Group chief executive Rudolf Fourie said on Monday.

The group had been forced to substantially “rightsize” its road construction business in its 2019 financial year due to almost no tenders being issued, and in the six months to August 31, a further 61 staff had to be retrenched.

The main reason for a 1.9 percent decline in group turnover in the six months to August 31 to R4.04bn had been the dearth of road construction work due to the government previously simply not making new tenders available, he said.

This had since changed. Operating profit was up 37 percent to R216.3m.

Following the cost cuts in 2019, “we have managed to stop the bleeding and are better positioned to manage the lower volume of construction work on hand, while we have maintained sufficient capacity to participate in an anticipated improvement in the sector,” Fourie said.

He was commenting after the group, which also has a materials handling and infrastructure division, reported a 64.1 percent increase in headline earnings per share to 58.6 cents in the six months to August 31.

Raubex’s share price rose 2.18 percent to R20.17 on Monday morning, before closing at R19.74 on the JSE.

Net asset value increased to R4.4bn compared with R4.29bn at the end of the first half in financial 2019.

Fourie said the earnings increase was pleasing, but off a low base - the group had not been able to secure new road tenders for nearly two years, he said.

Softer results were reported by the materials division in the interim period.

New coal contracts, slightly less profitable, had been entered into.

Revenue for the division fell 10.8 percent to R1.36bn and operating profit decreased by 24.9 percent to R144.1m.

The infrastructure division experienced strong growth in the first half, mainly from work related to the Renewable Energy Independent Power Producer Procurement Programme.

Right-sizing initiatives undertaken in the prior year had substantially curtailed the losses reported in the previous corresponding period.

During the reporting period, 61 employees were retrenched, while a loss making contract related to the special maintenance of the N2 near Butterworth, had resulted in a R15.5m operating loss.