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Apr 20, 2009

B&W secures orders worth R600m as it diversifies in light of slowdown

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B&W Instrumentation MD Brian Harley discusses the company's current growth strategy (Videographer: Danie de Beer; Editing: Darlene Creamer)
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JSE-listed electrical and instrumentation contractor B&W Instrumentation, which had diversified its focus as part of its efforts to mitigate against the economic slowdown, had secured a record amount of work up to 2010, MD Brian Harley reported on Monday.

Its order book stood at about R600-million, with R474-million of that secured during the interim period, which ended on February 28, 2009.

But market conditions in the sectors in which the company operated had deteriorated over the last six months, and this trend was expected to continue until 2011/12. None of the projects in which it was participating had been cancelled, but a number had been delayed.

To reduce the impact of the economic slowdown, B&W had decided to identify a number of projects that it wanted to participate in early and had marketed itself for those projects.

B&W had also diversified into the oil and gas, power generation and infrastructure sectors, whereas it had previously focused mostly on the mining sector.

Executive chairperson John Barrow added that B&W had increased its market share to 22%, compared with 18% in 2008.

Further, it was in the early stages of tendering for Eskom’s two new coal-fired power stations, Medupi and Kusile, for which it expected to receive a “sizable chunk” of work on at least one of the projects.

The company could also potentially work on a new 270-MW power plant to be built in Botswana, as well as oil refineries that would be built in South Africa and in Mozambique.

Harley noted that B&W was aiming to secure R150-million of work in the oil and gas sector and R190-million of work in the power generation sector in the next few months.

Most of its focus in the mining industry had now also shifted towards coal-mining projects, with Harley saying that it would tender on the two new coal mines that petrochemicals company Sasol was planning to establish in Mpumalanga.

In October last year, Sasol’s mining division reported that it would spend R6-billion on the development of two new mines in the Secunda area, namely Thubelisha, formerly called Rooipoort, and Impumulelo, formerly called Carmona.

In addition, Barrow noted that the company was now also on the lookout for potential acquisition targets, as the economic slowdown would reveal opportunities for takeover.

Harley added that the company had already started tentative talks with two potential takeover targets.

FINANCIAL PERFORMANCE
B&W had, in the six months ended February, increased its net profit by 21% to R34,1-million, compared with R28,1-million in the six months ended February 2008.

Headline earnings a share were up 22% to 17,2c a share, compared with 14,1c a share the year before, while revenues had increased by 23,6% to R271-million, compared with R219,3-million the year before.

Edited by: Terence Creamer
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