(Xinhua/Nemanja Cabric)
JOHANNESBURG - South Africa's construction sector was experiencing extremely challenging market conditions, with a lack of tenders issued by the SA National Roads Agency (Sanral), provinces and municipalities in the past six months because of delays in obtaining National Treasury approval.

Rudolf Fourie, chief executive of Raubex, the listed road construction and rehabilitation, infrastructure and building materials group, said last week that Raubex’s order book for Sanral contracts had decreased by 46.8 percent in the past six months and its provincial order book by 53.9percent while its municipal order book was down by 11.1 percent.

Fourie said Sanral had brought out only about three or four tenders in the past six months.

He said Raubex had two engagements with Sanral during which the agency indicated “they have 54 jobs waiting to be released as soon as Treasury gives the go-ahead”.

Fourie said there was also a total lack of expenditure on infrastructure by provinces and municipalities.

He said the low order book intake in the second half of the group's financial year to February impacted negatively on the results of the road construction and earthworks division, because of excess plant and idle staff being retained in anticipation of an improvement in the overall conditions in the construction sector.

Fourie said Raubex had been forced to concentrate on projects in Africa and expand into the Australian market, because of the lack of work in South Africa. Raubex also discontinued the operations of L&R Civils and Strata Civils in its infrastructure division, with the loss of 340 jobs.

Fourie said the closure of L&R Civils, Raubex’s water and sanitation and pipelines business, was “sad”, because they acquired the company five years ago in the belief there would be so much water-related work in South Africa they would be unable to keep up.

Fourie said Raubex Renovo, a new business focused on renovating commercial buildings, had secured two contracts in Cameroon worth a total of about R700million for the construction of a hotel for the French-based Onomo Hotel Group and a shopping mall for Actis. He said contracts in Africa accounted for 30percent of the group’s revenue.

Raubex yesterday reported a 13.3 percent increase in headline earnings a share to 228.6cents in the year to February from 201.7c in the previous year. Revenue dropped by 5.1percent to R8.54billion from R9bn.

Operating profit improved by 1.5 percent to R671.9million from R661.7m, but dropped by 14percent if the non-recurring payment related to the Voluntary Rebuilding Programme agreement with the government in the prior year was excluded.

Shares in Raubex yesterday closed unchanged at R21.50 a share.

-BUSINESS REPORT