Competitive pressures were “levelling off slightly” in the road construction industry, said Raubex Group CEO Rudolf Fourie on Monday.

Discussing the road specialist’s results for the financial year ended February 28, he said the lower margins seen in the road industry in recent years had not been sustainable. Evidence of this was the fact that nine of the group’s competitors had either recently been liquidated or now found themselves locked in business rescue operations.

Capacity in the roads industry increased by up to 300% in the run-up to the 2010 World Cup, said Fourie.

“We always said that conditions would normalise.”

Fourie expected the market to return to the median in the next two to three years, with five to six companies on average expected to tender for road contracts – similar to pre-World Cup conditions – down from the current 12 to 13 companies.

Fourie also noted on Monday that Raubex had signed an agreement with the Competition Commission to pay a R58.8-million penalty, following a nationwide investigation into collusion in the construction industry.

The Competition Tribunal still had to approve the agreement. Following that, Raubex was expected to make the payment in July.

The company had already made provision for this payment in the financial year ended February 28.

Raubex saw revenue increase 12% for the year, to R5.64-billion, compared with the previous financial year.

Operating profit was down 9% to R483.8-million (up 2.1% without the Competition Commission provision), while the group’s operating profit margin dropped to 8.6%, down from 10.6%.

Capital expenditure increased to R460.9-million, up from R286.6-million.

Raubex declared a final dividend of 35c a share.

The group’s order book stood at R5.2-billion at the end of the financial year, up from R4.6-billion.

A new contributor to this order book is Raubex Infra, a division focused on renewable energy, housing, telecommunications, rail and pipeline construction projects.

This division was established in an effort to better balance the Raubex portfolio and diversify the group’s revenue streams.

“We are quite excited about the growing markets in these disciplines,” said Fourie.

With only six months on the books, Raubex Infra recorded revenue of R162.8-million, with operating profit of R3.7-million.

It was also responsible for R768-million of the group’s order book.

Fourie would like to see the division grow to a R1-billion-turnover business.

He said Raubex Infra, and Raubex in general, had acquired significant expertise from the spate of liquidations seen recently among construction companies.

Internationally, Raubex saw a contraction of business activities in the past financial year, with revenue decreasing 48.1% to R461.7-million, mainly as a result of the completion of a Namibian road contract and reduced activity in Zambia.

Fourie said Africa was not cooling off as a market, but that Raubex would rather work at single-digit margins locally, if it failed to secure double-digit margins abroad.