Tuesday, 11 May 2010 02:00

PPC earnings 114.3c vs 20.3c

PPC has reported diluted headline earnings per share of 114.3c for the 6 months ended march 2010 from 20.3c a year ago.

Friday, 16 April 2010 02:00

Going nowhere fast

Line capacity has not been the problem

Thursday, 15 April 2010 02:00

Rail link overdue

A high-speed railway link between Johannesburg and Durban should already have been among the top items on the government’s transport infrastructure priority list?

Government spending on infrastructure remains key to the outlook for the construction sector in 2010 and beyond.

INFRASTRUCTURE development bottlenecks are weighing heavily on SA’s construction companies.

Construction IndustryConstruction companies are taking advantage of the surge in infrastructure spending in developing countries around the world.

But the pace of infrastructure development in SA, despite government’s commitment to spend R845-billion in the next few years, is cause for considerable concern as major projects are being delayed, cancelled or reworked.

Not only does this affect the construction companies, but thwarts efforts to create jobs in an industry that could make a meaningful contribution to job creation and economic growth.

Construction companies, who all reported results over the past two weeks, experienced a year characterised by the loss of major multibillion-rand projects in the Middle East, delays in public-sector infrastructure investment, the postponement or cancellation of mining and other big projects, and the effects of a strong rand.

These factors affected companies to varying degrees, and strong results from companies like Basil Read and Wilson Bayly Holmes-Ovcon (WBHO) indicated that they hardly seemed to notice.

Luckily, some major construction projects had already started before the economic meltdown, including World Cup stadiums, Eskom’s build programme (although some parts have been delayed), airports and roads.

SA’s construction companies have delivered the World Cup stadiums, and continued to complete and get major projects internationally.

Their order books shrank, but have since stabilised or are picking up.

But they are all concerned about whether government will ramp up its infrastructure plans as significant portions of their project pipelines were expected to be taken up with such activity.

During the past year they already faced delays relating to Eskom’s power plant build programme, with the Kusile plant being pushed out, initially for a year, but many say it will be longer. There have also been delays and disruptions to the Gautrain and roads and transportation projects.

In the interim, they are focusing on seeking projects elsewhere to secure a strong order book and revenue stream.

This week Aveng reported a 33% drop in headline earnings for the six months to December. Revenue declined 5% to R16.8 billion, largely because its manufacturing and processing division was affected by the steel price, as well as poor results from Australasia and the Pacific regions. SA and Africa operations were strong.

Tender development expenses took a chunk out of operating profit.

It secured contracts in SA and West Africa, including at Sishen and the Sadiola gold mine in Mali.

Aveng said the rate of public sector contract awards in SA was slow, but construction spend in Australia “is underpinned by large-scale public infrastructure investments”.

Results from other construction companies were mixed. Murray & Roberts’ earnings dropped sharply, but Group Five’s earnings were 8% higher.

WBHO and Basil Read reported strong earnings growth.

Group Five said that, to mitigate the downturn in the private sector, future work would be provided locally by infrastructure investment in housing, transport, prisons, government buildings and hospitals. It said that “the timing of resumption in government infrastructure spending has been and will remain a key factor for the domestic South African construction industry”.

While there is planning for R40-billion in the public-private partnership and concessions market for large public buildings, roads and power developments, only a few awards have been made, it said.

In the Middle East, however, there were new infrastructure opportunities, including in power and heavy industries.

At Group Five’s construction business, over-border work contributed 17% to construction revenue, down from 45% the previous year, reflecting the impact of the cancellation of Middle East orders and the decline in the mining industry.

But now it is focusing “on a more aggressive over-border presence in favour of public infrastructure contracts, as well as other opportunities”.

Murray & Roberts’ order book is heavily weighted to domestic major long-term public sector projects, it said. The order book has increased by 10%, but is still 27% below the R60-billion of December 2008.

“It is the group’s view that to attract significant new private-sector investment back into the South African market, tangible evidence is required that the infrastructure backlog is being replaced and enhanced with an infrastructure surplus.”

Middle East markets, with the exception of Dubai and Bahrain, have rebounded.

Murray & Roberts said it was involved in a delay and disruption claim relating to Gautrain, brought about by late transfer of land, dolomite rectification works and funding constraints.

About R2-billion of its working capital was in domestic public sector projects, of which about R350-million was in overdue debt. In the transport and power sectors, there have been delays with current contracts, in new contract awards and with the certification of payments, it said.

 

Friday, 19 February 2010 02:00

Sanyati bullish amid good news budget

Sanyati says that the 2010 budget is good news for its industry and has confirmed state's commitment to the 3- year R846bn infrastructural program.

The rapid rail link between Sandton and OR Tambo International Airport is likely to be ready in time for the Soccer World Cup in June, Gautrain said.

Tuesday, 10 November 2009 02:00

Raubex Group reports improved results

Raubex’s operating profit rise 10,6% to R440m in the six months to August, with the road construction earnings up 10,2% to 159,4c compared to the first half.

Francois DiedrechsenStrong government infrastructure spend saw Raubex Group’s operating profit rise 10,6% to R440m in the six months to August, with the road construction group’s headline earnings per share up 10,2% to 159,4c compared to the first half.

In an interim results statement, Raubex Group predicted “a strong performance in the second half” after reporting first-half revenues of R2,27bn, a rise of 1,8% from the corresponding period last year.

Declaring an interim dividend of 35c per share, Raubex reported a “stable” order book of R5,2bn, up from R4,9bn in the first half.

Profit before tax increased 11,4% to R429m from the corresponding period last year, with the group’s operating margin up from 17,8% in the first half to 19,4%.

Francois Diedrechsen, financial and commercial director of Raubex, said: “It’s a pleasing set of results — the world’s been in a fairly difficult period over the last six months, but we’ve still managed to achieve double-digit growth. We primarily operate in road infrastructure, which is government-driven business, so our exposure to the private sector is reasonably small, which has stood us well.”

Raubex’s road rehabilitation division, Roadmac, recorded a 19,9% fall in turnover to R944m from the first half, although it remained the largest contributor to group revenues. The division’s operating profit decreased 9,8% from the first half to R198,2m.

Raubex blamed the decline on “a change in the segmental mix as Roadmac’s resources are being deployed on various contracts in Namibia and Zambia, increased competition resulting in a lower rate of tender successes … as well as the effect of rise and fall clauses as declining input costs were passed on to the clients.”

Diedrechsen said “40% of Roadmac’s costs are oil price- related; a lot of the tenders we reported on were when oil prices were much higher, before the subsequent deflationary period”.

He also cited the appreciation of the rand against the Zambian currency, the kwacha, as affecting the group’s cash flow.

The statement said “in order to secure new work locally, current operating margins in the Roadmac and Raubex divisions will continue to be adjusted to account for the increased competition, particularly in the light road surfacing sector”.

 

The government has paid an extra R288m to fund the Gautrain Rapid Rail Link, due to cost overruns caused by higher than expected inflation.

Interest in commercial livestock and irrigation farms in the central Cape provinces – predominantly the Karoo and Kalahari regions – is now coming to the fore, says Wayne Rubidge, manager for Pam Golding Properties in these regions.

Page 15 of 26

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