https://www.engineeringnews.co.za

Construction materials cut WBHO earnings, order book up 65%

1st September 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

Font size: - +

Wilson Bayly Holmes-Ovcon (WBHO) had delivered “a reasonable performance” for the financial year ended June 30, said CEO Louwtjie Nel on Monday.

“We are getting through this tough period. It hasn’t really improved much over the past two, three years, even though it is slightly better out there than it was before.”

The construction group reported an increase in revenue for continued operations for the year ended June 30 by 8.4%, to R25.8-billion, compared with the previous financial year.

Operating profit of continuing operations was up 10.2%, to R1-billion.

During the year under review, four operations within the construction materials unit were classified as discontinued operations.

Symo Steel (a division of Capital Africa Steel) and Krost Shelving were disposed of for a loss of R40-million. A sale agreement, pending certain conditions, had been concluded for Dywidag Systems International.

Capital Africa Steel was engaged with a number of parties interested to buy the Capital Star Steel (CSS) business.

CSS struggled in an African market where Asian manufacturers were dumping pipe in the continent, said Nel.

The trading losses within CSS amounted to R65-million for the year, and at June 30 the carrying amount of the factory was impaired by R360-million.

The combined effect of the trading, impairment and disposal losses saw a decrease in earnings a share of 30.8%, from 1 104c a share in the previous financial year, to 764c a share for the year ended June 30.

Even though “CSS spoilt the party this year”, it was important to note “that WBHO’s core business was healthy, with a very strong order book”, emphasised Nel.

In reviewing WBHO’s continuing operations, the group’s building and civil engineering division achieved 7.2% revenue growth in what Nel said remained a buoyant private sector building market.

The expansion of the division’s geographical footprint into Africa continued to gain traction, with the award of two shopping centres in Ghana.

In civil engineering the Kusile power station project continued to contribute towards revenue for the division, which was helpful in the context of an under-pressure mining infrastructure sector.

“We are treading water, hoping for some mine infrastructure work to flow in,” said Nel.

He was hopeful of positive movement in the mining industry, in Africa and South Africa, in the next 12 to 18 months.

WBHO’s roads and earthworks division saw revenue drop 1.4% on the prior year, owing to “very little activity” in the mining sector locally and in Africa.

The absence of an anchor mining project in West Africa, together with the competitive nature of the roads market, continued to affect the overall margin of the roads and earthworks division.

In Mozambique revenue grew by 16% following the start of the EN4 road rehabilitation contract for Trans African Concessions.

Revenue growth here and in Botswana managed to offset a sharp decline in revenue in West Africa.

Revenue from WBHO’s Australian businesses decreased 2.4% in dollar terms. Revenue from Probuild decreased by 7.3% in dollar terms, however, this was primarily due to secured projects starting later than anticipated, rather than a decrease in activity.

A number of residential towers were completed during the financial year, with three new towers under construction, as well as three shopping centres.

WBHO Civil Revenue grew by 33.6% for the year ended June 30, supported by the $113-million anchor project at the Burrop Technical Ammonia Nitrate facility in the Pilbara, as revenue from mining-related projects in Australia continued to taper. 

As part of a strategy to lessen reliance on mining work, WBHO Civil has started a roads and special projects division. However, penetration into these new markets was slower than anticipated.

Revenue from continuing operations within WBHO’s construction materials division amounted to R1.3-billion and relates to the rebar, ready-mix and aggregate businesses. 

Nel said WBHO had no current plans to exit the remaining construction materials businesses.

ORDER BOOK UP 65%
WBHO on Monday reported a 65.3% jump in its order book compared with the previous financial year, to R36.1-billion.

The main reason for this steep improvement was a 111.7% increase in the Australian book.

The strength of the Australian book diluted the order book contribution from Africa (including South Africa) to 36.7%, down from 2013’s 50.6%.

Looking ahead, Nel expected the current strength within the local building market to persist in the short to medium term.

“There is so much work, we are going to be really busy in South Africa over the next two years.”

Margins had, however, reached industry norms and the scope for further enhancement was limited.

Large government infrastructure projects had also not been forthcoming.

“When you look at our pipeline, there is not one government job dialed in,” said Nel. “We are really struggling to see it. We can’t believe it any more. Of course we hope it will happen, because if it doesn’t, I don’t know where we will be in five years’ time.”

In Australia, Probuild had secured all three of the large-scale retail projects brought to the Victorian market in the last 12 months, two of which were more than $350-million. During the year the company identified an opportunity to enter the Queensland market, securing $334-million in projects – $298 million of which was awarded post June 30, and was not included in the order book above.

Edited by Creamer Media Reporter

Comments

Showroom

Universal Storage Systems (SA)
Universal Storage Systems (SA)

South African leader in Steel -Racking, -Shelving, and -Mezzanine flooring. Universal has innovated an approach which encompasses conceptualising,...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.117 0.169s - 150pq - 2rq
Subscribe Now