JSE-listed civil engineering and construction company Wilson Bayly Holmes-Ovcon’s (WBHO’s) headline earnings a share rose 23.6% to 645c apiece for the six months ended December 31.
The company’s revenue from continuing operations also increased by 7% from R14.4-billion to R15.4-billion, bolstered by 19% growth from its Australia-based operations.
The company attributed its positive growth to the repositioning of its Australian infrastructure business in the Western and Eastern regions, which was progressing well. Its Western-region business had been awarded a number of small projects, though the latter had not yet been awarded any contracts.
However, WBHO’s Africa-based operations did not fare as well, with revenue declining 5% in view of significantly lower activity experienced in civil engineering markets, which continued to affect the group across all its geographies.
The impact was most evident in the 17% decline in revenue from the roads and earthworks division. Nevertheless, the current high volumes of local building work assisted in lessening this effect on the building and civil engineering division, which achieved 2% growth.
CEO Louwtjie Nel told Engineering News Online in a telephone interview that many of WBHO’s projects would be completed in the year ahead, therefore the company would be on the lookout for more projects in the building sector to bolster its order book.
However, he noted that, despite many of the projects in Australia and South Africa reaching completion, the company was already in discussions to secure a strong pipeline of continued operations. It was also currently engaged in the construction of Pretoria’s Time Square Casino and Hotel; the Thavani Mall, a regional shopping centre in Thohoyandou; and the Cornubia Retail Centre in Umhlanga, all of which were due for completion in 2018.
“Over the next 12 to 18 months we will see positive growth in this sector; however, the roads and civil engineering sector will continue to decline,” predicted Nel, adding that this would be exacerbated by the market becoming increasingly competitive while the number of projects declined.
“The balance will come in from the building sector. But we have been in the roads sector for about three years now and, while we are under pressure, we have found our feet and are confident that we will be able to continue with what we are doing,” he pointed out.
Nel further noted that WBHO would closely monitor Finance Minister Pravin Gordhan’s Budget Speech on Wednesday. “We are hoping that it will bring the country back to reality. If the economy is to grow, some defined steps towards implementing the National Development Plan would need to be taken.
“We are also hoping to see a significant cut in wasteful expenditure,” added Nel.
Meanwhile, strong growth of 38% in Australia’s building revenue offset the declining civil engineering-related revenue, which was impacted by market conditions and the restructuring of the civil division in the previous financial year.
Nel added that acquisitions were not off the table for the year ahead, while the company would also look to expand in nontraditional markets, such as East and Central Africa.
Revenue from construction materials, which now comprised only the steel-reinforcing business within Capital Africa Steel, increased by 2%.
Operating profit before nontrading items also increased by 29% to R495-million from R384-million in the previous corresponding period.
WBHO directors further declared an interim gross dividend of 135c apiece, payable from April 15.