WBHO warns of earnings decline as Australian project turns sour
CAPE TOWN – WBHO, once a darling among construction companies, said on Monday that headline earnings per share could fall between 30 percent and 40 percent in the year to June 30 after a project in Melbourne, Australia, soured.
The share price tumbled 4.1 percent to R103.11 per share by Monday afternoon, a large drop for a company that has managed to keep its share price relatively steady in the face of dramatic slumps in the share prices of peers that once dominated the industry.
The JSE’s construction and materials index was only down 1.2 percent at the same time on Monday.
“The forecast loss position on the Western Roads Upgrade (WRU) project in Melbourne, Australia… has negatively affected the operating performance of the group in the current financial year,” WBHO management said in a trading statement.
The retirement of chairperson Mike Wylie was also announced. After 45 years, he would retire at the annual general meeting to be held on November 20, a statement said.
Chief executive Louwtjie Nel was appointed executive chairperson to “ensure the constructive and effective relationship between the board and executive management continues.”
Wolfgang Neff, who joined WBHO 22 years ago and was managing director of the North and Africa Building divisions for seven years, would replace Nel as chief executive.
The full results are expected to be released on September 3, 2019.
In the six months to December 31, 2018, WBHO reported a “disappointing” 80 percent decline in headline earnings per share to 145.6 cents, mainly due to the recognition of a provision for anticipated future losses on the WRU project in Australia.
The WRU project includes eight high-priority road upgrades, road widenings, intersection upgrades, almost 30 kilometres of duplicated lanes and more than 260 kilometres of road rehabilitation and maintenance for 20 years, across Melbourne’s west in Australia.