Tuesday, 23 February 2010 02:00

Wilson Bayly earnings 836.7c vs 704.4c

WBO has reported diluted headline earnings per share of 836.7c for the 6 months ended December 2009 from 704.4c a year ago.

Thursday, 11 February 2010 02:00

WBHO expect 15-20% higher earnings

Wilson Bayly Holmes - Ovcon Ltd advised that earnings per share and the headline earnings per share are expected to be between 15% and 20% higher.

Tuesday, 08 September 2009 02:00

WBHO keeps positive outlook on SA

Construction group WBHO says despite the recessionary conditions its South African construction outlook remained positive.

Monday, 19 January 2009 02:00

Construction groups bank on state work

Construction companies are counting on the government’s multi billion-rand spending programme in infrastructure projects to see them through the lean economic times caused by the global credit crunch, which has seen work from the private sector dwindle.

Construction IndustryThe global economic meltdown has created a lot of uncertainty for construction companies, most of which saw private sector work decline towards the end of last year.

A number of private sector clients of construction companies have suffered cash flow problems due to the financial crisis, which has affected certain projects.

From the second quarter of last year, the construction sector has been severely downgraded by the stock market on fears of a recession and depleted future work opportunities.

With commodity prices plummeting in recent months, the mining sector, which provides a big chunk of work to several construction companies, has scaled back on capital expenditure.

However, with the government reiterating that it will not put the brakes on its infrastructure spending programme, construction companies will be seeking more exposure to this public sector investment.

In his medium-term budget speech last year, Finance Minister Trevor Manuel said the government would continue to invest in several areas of infrastructure, including rail, roads, ports and energy in a bid to boost economic growth.

Group Five CEO Mike Upton said last week the group had a “reasonably good” order book to see it through the turmoil. “This (the order book) is quite well in tune with the public sector spending. The private sector has taken a turn for the worst, with capital spending, especially in mining, expected to drop significantly,” he said.

At the end of June last year, the group's one-year order book stood at R8,5bn, which it said at the time reflected its strategic positioning in the public infrastructure cycle with a mix of 65:35 in favour of public works.

“We are not negative at this stage but cautious.

“Our projections are not the same as last year, and we are not seeing the same security of work as we did six months ago. We have seen a number of projects from private sector clients that have been curtailed in recent months due to the credit crunch.”

WBHO CEO Louwtjie Nel said with work from the private sector drying up, the company was shifting emphasis towards government projects.

He said whereas two years ago the split between public and private sector work was about 20:80, that split was now about 50:50.

“We were traditionally focused on private sector clients, but we are now swinging in a big way towards government infrastructure work, such as roads, energy and hospitals — which should get us through 2009 quite comfortably.

“Beyond that, nobody really knows what is going to happen,” he said.

Nel said the group’s civils division was feeling the pinch the most as work, especially from the mining sector, had almost dried up.

“But overall we are now getting well exposed to government spend.”

Murray & Roberts said its outlook for this year had not changed from what it was in November when the group reported that it had been forced to restructure its operations in the light of the global credit squeeze.

The group said then that it had delayed or suspended some of its projects as some of its clients felt the pinch of the credit crunch.

“There are a number of significant public works and other strategic opportunities in the group's domestic and international project pipeline that are likely to proceed and which will provide stability through the difficult times ahead,” it said.


Wednesday, 10 December 2008 02:00

Stefanutti wins Kusile contract

Stefanutti Stocks said that a consortium of JSE-listed companies it was leading had won a civil works contract for Eskom’s Kusile power station in Mpumalanga.

Wednesday, 30 July 2008 02:00

Limpopo stadium strike ends

A two-week long strike by the National Union of Mineworkers at the Peter Mokaba Stadium in Polokwane, Limpopo, has ended, the NUM announced on Tuesday.

Construction Industry"Parties have agreed that workers will get their R3000 bonuses in two parts. Firstly R1000 on the eighth [August 8] and then again R2000 in December," NUM spokesman Lesiba Seshoka said in a statement.

"Parties also agreed that those who leave the contract before the end of the term either due to retrenchment or lapse of their contracts will also receive their full bonus," he said.

The construction consortium WBHO originally gave workers until Monday to return to work or face dismissal, maintaining that the strike was illegal.

However, the NUM asked that this deadline be extended to Tuesday.

Workers were upset at a decision by WBHO management to pay their bonuses for December this year only on completion of the stadium in November next year.

The stadium will be one of those which will host Fifa 2010 Soccer World Cup matches.


Friday, 04 July 2008 02:00

Taking Stocks for future

One of the top three or four construction companies in SA within the next few years — that’s the target status for Stefanutti & Bressan (S&B), as a sequel to its impending R1,1bn acquisition of unlisted Stocks Limited. Competition commission approval is expected by the end of July.

Willie MeyburghS&B has a market capitalisation of R2,4bn. When it listed in August last year the issue was 21 times oversubscribed. After going in at R12/share, S&B has traded as high as R27 but dropped in recent months to around R15,50.

In a joint statement the companies said the merger would position the enlarged group “as a major competitor in the first-tier construction sector, with almost R5bn turnover and 8 000 employees”, and it is not seen as a cost cutting exercise.

Stocks Building Africa was launched in 2001, after the old Stocks & Stocks was taken off the exchange as a consequence of some tough times. Management bought out what was left.

S&B CEO Willie Meyburgh says S&B heard that Stocks was interested in listing again, and that S&B had convinced the company that throwing in its bulk with S&B was the smarter move.

The industry in SA is dominated by a few large companies in terms of capacity. At the top are Murray & Roberts and Aveng subsidiary Grinaker-LTA; in the second tier are Group Five and Wilson Bayly Holmes (WBHO); and the smallest of the traditional big five is Basil Read.

There is not much competition in the top two tiers, and this allows these contractors a lot of leeway when it comes to negotiating price.

“We would like to be in the same league as the Group Fives and WBHOs, and in time get to the level of M&R and Grinaker,” says Meyburgh.

“We need to upscale to be able to take on the larger projects on our own, so that we can keep more of the margin for ourselves. It will also raise the profile of the company.

“Our competitors know the name Stefanutti & Bressan, but investors and the public in general don’t really know the company or the quality of the company.”

Before embarking on this deal, S&B had wanted to diversify itself geographically. “We said we wanted to get into first-class emerging markets such as Dubai or Abu Dhabi,” says Meyburgh.

The transaction entails a swap of about 40m shares, while Rand Merchant Bank — a substantial shareholder in the unlisted Stocks — will be paid R382m by S&B for its stake.

S&B already has a strong offering. The group is well established in civils (concrete structures such as bridges) and construction. It is also exposed to mining, which is expected to continue investing in new capacity. S&B builds and maintains slimes and tailings dams, and is involved in contract mining for open pit mines.

The group also has well-established building divisions in the Western Cape and Gauteng, with a smaller presence in KwaZulu Natal — where Stocks has a strong presence.

The deal may have come at a good time for Stocks, as a slowdown in building is expected after consecutive interest rate rises.

It will be up to the Stocks team to take advantage of the Gulf area, where petrodollar-funded building activity appears to be isolated from global economic pressures. Stocks has a handful of small joint ventures operating in three of the Arab emirates, which S&B are hoping to be able to leverage off into larger contracts.

Perhaps the biggest and most valuable gain for S&B is an experienced team of managers with a strong entrepreneurial flair. Gino Stefanutti, S&B’s founder and chairman, says: “People have asked us, ‘Why are you buying a building company?’ but we say that this is mainly a construction company. For example, if you look at the work they have done at Cape Town airport, the parking lot — it’s a civil's job. These people can be returned to civil's any time,” says Stefanutti.

“The beauty about Stocks is that they are owner-managed. They were all part of the leveraged management buyout — they are just like us. We get on well. Like us they are contractors and not professional managers.”

With more bodies on board, S&B will be able to staff the stream of larger projects that it expects to win tenders on. Government has committed itself to spending about R515bn over the next three to five years, with more work likely to follow.

Meyburgh says the group has a vision of reaching turnover of R10bn within the next three years. A double-digit operating margin is also being pursued.

Though the Stocks acquisition will dilute operating margins slightly (7,2% in financial 2008), it will be earnings-enhancing. The value of the merger will only really make itself felt in February next year. At that point there will have been at least seven months of Stocks trading in the numbers.

On a forward p:e of 12 for S&B, it seems the market is missing out on yet another trick. Meyburgh says the company is going to perform better than its forward p:e would lead one to believe, emphasising that at these levels there is a lot of value to be had.


Friday, 27 June 2008 02:00

Stadium workers want bonuses

Unions are seeking a R1500-a-month "project bonus" for all workers at Cape Town's Green Point 2010 stadium site, regardless of whether construction targets are met. They believe the bonus should be paid even if the workers go on strike.

Construction IndustryThis has emerged from the proceedings of an arbitration hearing held under the auspices of the Building Industry Bargaining Council (BIBC).

In an advisory award handed down this week, arbitrator Jacobus Koopman said the Labour Relations Act "clearly precludes the applicable unions from striking over matters bound by the collective agreement" -including the bonus.

The three-year agreement between unions and employers he referred to, which was reached in the BIBC, covers wages and conditions of service.

Green Point and other 2010 stadia under construction in other provinces have been dogged by strikes.

This week workers at the Mbombela stadium in Mpumalanga who were dismissed following a strike over wages allegedly burned a truck, motor bikes and a mobile office on the construction site.

A strike at Green Point in September last year led to losses of about R1 million a day.

Koopman's award followed an application brought by the National Union of Mineworkers and the Building Construction and Allied Workers Union against the Murray & Roberts/WBHO joint venture contracted to build the Green Point stadium.

The unions represent some 35% of the just over 900 workers on the site, the rest of whom are not unionised.

The unions complained that the employers had refused to negotiate at site level over a union proposal for a R1500 a month "project bonus" for all workers, not linked to productivity, and a R15 an hour wage increase.

The increase would be a 90 percent hike in their wages.

BCAWU organiser Eugenia Peter maintained in the arbitration hearing that the workers should get the proposed bonus even if they went on strike.

As the stadium superstructure is due to be completed in September, this would mean an additional R6000 for every worker.

In his submissions to the arbitrator, the joint venture's advocate, Colin Kahanovitz, said the workers were already being paid a performance-linked incentive bonus.

Although an agreement for a "project bonus" had been concluded after a strike at the Durban stadium, the payment of that bonus had also been linked to the achievement of construction targets, he said.

The employers had argued that the unions' application was "frivolous and vexatious".

"The main purpose of these hearings seems to have been to allow the unions involved to show their members that they were prepared to try to do something in order to cultivate membership," Kahanovitz said.

Koopman said in his findings that the unions believed that if the matter remained unresolved, it would ultimately give them the opportunity to embark on a protected strike.

But he found that the unions at the Green Point Stadium had no right to demand negotiations at a site rather than a bargaining council on remuneration issues.

He said he had decided not to make any costs order.

"The relationship between the parties is at a delicate stage and a costs order may exacerbate tension," he said.


Friday, 11 January 2008 02:00

Gautrain leaves black contractors behind

Black-owned construction companies are spoiling for a fight with the government over the Gautrain project

Monday, 12 November 2007 02:00

Strike goes on at World Cup stadium

Unless the Ethekwini Municipality pushed the company building Durban’s 2010 stadium to pay its workers decent wages, the labour strike would continue — a move which will affect the deadlines set by world soccer controlling body Fifa , the Congress of South African Trade Unions (Cosatu) said last week. 

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