WBHO said there was no doubt that more businesses would disappear. Photo Simphiwe Mbokazi/African News Agency (ANA)

PRETORIA – Listed construction and engineering group WBHO is anticipating casualties in the listed construction sector.

Mike Wylie, the chairperson of WBHO, said yesterday that there was not much opportunity for consolidation in the sector because there was not enough work.

Louwtjie Nel, the chief executive of WBHO, said there was no doubt that more businesses would disappear. “We have already seen two or three going into liquidation, and a few more into business rescue,” he added.

This was a reference to Cape-based NMC Construction going into liquidation in January and Basil Read Construction, Esor Construction and Gauteng-based privately-owned Liviero Group all going into business rescue, while others were experiencing financial difficulties, including Aveng and Group Five.

Wylie said he never thought he would see what had recently happened in the industry, with two of the seven listed construction companies, WBHO and Raubex, accounting for 95 percent of the market capitalisation of the entire industry.

“It’s worrying, because it’s the only industry that can get this country out of trouble. In any growing economy, the biggest employer is the construction industry,” he said.

Nel said it would not make sense for WBHO to make any big acquisition, but there were pockets of excellence in a lot of the financially distressed companies and “we are keeping our eyes open”.

But he said WBHO wanted to ensure its businesses in Australia and the UK were operating properly, before scrambling it with any acquisitions.

Nel said the South Africa market was in a low growth environment with an uncertain political climate, resulting in low fixed domestic investment and public infrastructure spending just about coming to a halt. Despite this, WBHO had produced a solid result in a tough market, with its operating profit in South Africa increasing by 10 percent in the year to June.

He said WBHO’s local order book declined by 26 percent to R8.7 billion at end-June from R11.7bn in the previous year, and the group was feeling the pressure locally, although it had secured R2.5bn of work locally since end-June. The UK order book at R11bn, including its acquisition of Russells Limited after year-end, constituted 20 percent of WBHO’s total order book of R53.75bn.

The Australian order book at R32.57bn accounted for 61 percent of the total order book.

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- BUSINESS REPORT