Nelson Mandela Bay‘s 2010 World Cup stadium will not be delayed as a result of the global financial crisis, with the municipality reporting that construction is ahead of schedule.

The assurance comes after Sports Minister Makhenkesi Stofile expressed fears that the stadium would not meet its initial March 31 deadline.

“Nelson Mandela Bay is no longer a host for the Confederations Cup, therefore there is no March 31 deadline to meet,” municipal spokesman Lourens Schoeman said.

“The stadium will be ready for the rugby match between the British Lions and a Coastal Unions side on June 16.”

Despite a number of construction firms having closed for the Christmas period, work at the multi-purpose stadium continues at no extra cost to the municipality.

“The main contractor is on schedule and only contractors behind schedule are currently working to make up for lost time at no cost to the client,” Schoeman said.

The initial cost of the stadium had been estimated at R250-million, but rose to R1,2-billion in January last year; and currently the budget for completion stands at R1,95-billion, of which the Nelson Mandela Bay municipality will have to pay 10 percent.

The balance of the costs will be carried by the national and provincial government “on a sliding scale”.

“Progress with construction at the stadium has been moving at an impressive rate with the playing area fully grassed, the players‘ change rooms completed, 40 000 of the 44 000 seats already installed and 30% of the roof completed.

The lighting infrastructure is being installed as work on the roof progresses,” said Schoeman.

Record order books are expected to help construction stocks maintain decent earnings growth in the new year, but beyond that the future is uncertain as the global credit crisis eats up future work opportunities.

South Africa‘s big-four construction firms boast a combined R120 billion order book, thanks to the phenomenal sector growth in the lead-up to the 2010 Fifa World Cup, as well as developments in other markets.

While these order books will certainly build up construction groups‘ coffers, the global economic slowdown – which is expected to deepen next year – may open floodgates of project cancellations and delays.

So, while “the outlook for next year is pretty decent, future work opportunities have been reduced”, says one analyst, who declined to be named.

Already Murray & Roberts, the country‘s largest construction firm, has had to adjust its books after its Trump Tower joint venture in Dubai was suspended, wiping R3,2-billion off its R61-billion order book, although the firm landed a R6-billion contract to build a terminal at Dubai International Airport shortly after this.

Underscoring predictions of the tough trading conditions ahead are union claims that Murray & Roberts is planning to axe workers as the rough trading environment restricts its ability to expand.

Group Five disclosed in an interview that there “had been a small and immaterial reduction” in the number of projects in the African mining sector and that “one small housing project” for a mining firm had been cancelled.

Eskom has also terminated the procurement processes for the proposed multi-billion-rand Nuclear-1 power plant project.

Aveng and Murray & Roberts were in two separate consortiums bidding to build the power plant, with Aveng saying the termination was “understandable” and that it had confidence in the continued infrastructure roll-out in the markets in which it operated.

“I don‘t think we have seen the last of these project cancellations and delays,” the construction analyst said.

Project flow from the mining sector is expected to worsen in the new year, with Group Five having already seen a slowdown in African copper mining.

Mining companies across the world are cutting back on production as weakening commodity prices bite into earnings, with Anglo American and Anglo Platinum expected to slash capital expenditure in half when they announce revised spending plans next week.

Together with public sector spending, construction companies also based their original rosy 2009 outlooks on “continuing demand for commodities”, which was expected to spur expansions in the mining sector, although many miners are now cutting back.

Aveng has downplayed the impact of the global crisis, saying its project pipeline remained strong, but it is “taking longer for clients to finalise projects”.

For the next few years the sector is banking on South Africa‘s multibillion-rand infrastructure spending, but if the national treasury is unable to raise funds offshore to counter shrinking foreign capital inflows it may need to reprioritise its spending plans.

South Africa is spending R600-billion over the next three years to upgrade and build new roads, power generation and transmission, rail, ports, pipelines, hospitals, prisons and schools.

Another analyst said the fact that Eskom – which accounts for the bulk of the infrastructure package – had to shelve its nuclear project suggested that even governments, albeit to a lesser extent, were feeling the pinch of tighter credit lending.

“Those with no exposure to public sector spending are in for a rough time,” the analyst said.

But all big-four construction companies are comprehensively exposed to this multi-billion-rand package, with Murray & Roberts saying it will drive annual growth of 15% to 25% through to at least 2014.

Nersa says it has excluded the construction of stadiums for the 2010 World Cup and Gautrain from penalties that are part of the power conservation programme.

Top JSE-listed construction companies Aveng and Murray & Roberts were removed from the JSE Top 40 index of blue chip companies.

Top JSE-listed construction companies Aveng and Murray & Roberts were removed from the JSE Top 40 index of blue chip companies.

Engineering and construction company Murray & Roberts has been awarded a major contract to build a terminal at Dubai International Airport with joint venture partner Al Habtoor.

Al Habtoor Murray & Roberts Takenaka Joint Venture has been awarded the contract for Concourse 3 at Dubai International Airport for the Department of Civil Aviation.

CONSTRUCTION group Raubex yesterday reported a strong performance for the first half of the year, boosted largely by its recent trail of acquisitions.

Financial director Francois Diedrechsen said the results were in line with expectations and that the group’s pre listing growth strategy was beginning to pay off. Since listing on the JSE in March last year, the company has made several acquisitions, which have ramped up its order book to just under R5bn and positioned it well to take advantage of the billions of rands being spent on Gauteng’s road improvement programme.

Operating profit jumped 108,1% to R398m from R191,2m in the previous comparable period, while headline earnings per share grew 80,5% to 144,6c per share from 80,1c. Revenue increased 131,7% to R2,23bn from R963,5m.

However, group operating margin decreased 10,1% from 19,8% to 17,8% compared with the corresponding prior year period as a result of the acquisitions concluded towards the end of last year, as well as its 5% exposure to the poorly performing residential market.

“While the acquisitions have enhanced our earnings, they have also had dilutive effects on our margins. The fact that the residential property market has not been growing at all has also affected our margins,” Diedrechsen said.

The results included the first set of earnings from the acquisitions completed last year, and which gave Raubex the capacity and depth of skills to take full advantage of the accelerated demand.

“During the period, we also successfully bedded down a number of acquisitions, the financial effects of which are included in this set of results,” Diedrechsen said. “These acquisitions have proved to be value-enhancing and are performing well. Importantly, the depth and breadth of skills and capacity that they’ve brought to the group positioned us well to continue taking full advantage of the spend driven by the government and private sector.”

Raubex said it had especially benefited from the government-led investment programme in national road expansion and rehabilitation. The group has over the past year successfully made five strategic acquisitions, as it geared itself up to meet the increased demand created by the road upgrade programme.

Early this year, the group acquired Bonn Plant Hire and the business of Akasia Road Surfacing for R117m, which fitted in the group’s Roadmac division, specialising in road construction, road surfacing and asphalt manufacturing.

What began as a single building residential conversion project to create important affordable housing in central Jo’burg has been skyrocketed into an unprecedented multi-building conversion of over a dozen neighbouring properties

Protech Khutele expected headline earnings per share and earnings per share for the six-month period ended August 31 2008 to between 25% and 35%.