Oct 25, 2012
Turnaround strategy sees Esorfranki restore profitabilityBack
Construction|Engineering|Gauteng|Johannesburg|Natal|Pretoria|Africa|Civils|CoAL|Esorfranki|Gautrain|Ghana|Housing|Pipelines|Pipes|PROJECT|Projects|Road|System|Africa|Ghana|Mauritius|Mozambique|South Africa|Gautrain|Kusile Power Station|Park Station|Equipment|Mining|Pipes|Northern Cape|Gautrain|Bernie Krone|Gautrain|Power|Rail|Pipelines
© Reuse this
The company on Thursday reported 300% growth in its headline earnings a share to 7.8c, up from a headline loss a share of 3.9c in the year-ago comparitive period, owing to group-wide rationalisation processes which were put in place in the previous financial year.
Esorfranki boosted its six-month revenue to R1.14-billion, while net asset value a share increased 16.5% to 267.9c.
CEO Bernie Krone said the group managed to grow its order book by 35% to R2.43-billion, despite the depressed South African construction sector.
“We are aiming to continue growing our order book with more long-term contracts,” he said, adding that Esorfranki’s focus would be on expansion into Africa, while capitalising on opportunities in the local market when they became available.
Krone was particularly upbeat about Gautrain private development spinoffs, stating that it expected signficant development to occur around Park station and into the Braamfontein surrounds, now that the final leg of the passenger rail system was operational.
Meanwhile, Krone said he was satisfied with the group’s well-sustained profitability in a still tough economic climate.
During the period under review, the group spent R126-million on beefing up property, plant and equipment, the majority in Esorfranki Civils.
Formerly beleaguered Esorfranki Civils saw an ongoing revival following on the stronger second half of the previous year. Revenue increased 69% to R599-million, while the division’s order book grew 101% to R1.8-billion with improved operating margins.
“The R21 road contract has turned around and is now breaking even and work on the Northern Cape’s Bestwood housing project is progressing well,” said Krone. Esorfranki’s part in the R340-million Orchards development, near Pretoria, also kicked off during the period.
With affordable housing projects planned in the Vaal Triangle and Thabazimbi and a low-cost housing development in Johannesburg, the group was expected to further capitalise on opportunities in housing.
He noted that securing mining sector contracts remained difficult in light of market conditions. Nonetheless, Esorfranki Civils managed to secure contracts at Kusile power station.
Esorfranki Pipelines achieved an order book of R314-million at period-end, which compensated for the loss of the Western Aqueduct contract in the previous year, while resolution of the ongoing BG3 contract dispute was expected in early 2013.
“We are optimistic regarding Esorfranki Pipelines’ prospects,” said Krone, referring to potential projects in KwaZulu-Natal and Gauteng, and further afield in the rest of the Southern African Development Community region. He expected that the slow delivery of pipes from suppliers, which is currently hampering growth, would be alleviated in the next six months.
Turning to Esorfranki Geotechnical, he said growing offshore revenue reflected the success of expansion moves into sub-Saharan Africa, and offset to an extent a slowing South African construction sector.
“Locally competition remains stiff, although we have a 40% market share. Domestic revenue increased only 1.2%, with South Africa still beset by pricing pressures and limited demand, compared to offshore revenue, which grew 26%.”
He pointed out that Ghana, Mauritius and the coal mining sector in Mozambique offered some attractive opportunities for growth. “Despite competitive markets Esorfranki Geotechnical expects to achieve targets in all regions this year.
“Although the Angolan market has become more competitive with the entry of international construction companies, the divison is confident of further contract awards,” Krone said.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Construction News
Updated 20 minutes ago Russian nuclear energy group Rosatom confirmed on Friday that it had canvassed funding options with South African government officials during a recent “nuclear vendor parade workshop” held in the Drakensberg on October 23. The company said the options discussed were...
Updated 2 hours 46 minutes ago Cities in South Africa were designed to exclude and segregate, posing a challenge to town planning and bringing citizens closer to urban amenities, Johannesburg mayor Parks Tau said on Friday. "We've had to deal with this reality over the past 20 years," Tau said in...
Updated 26 minutes ago Russian nuclear energy group Rosatom confirmed on Friday that it had canvassed funding options with South African government officials during a recent “nuclear vendor parade workshop” held in the Drakensberg on October 23. The company said the options discussed were...
Updated 30 minutes ago The shortfall on South Africa's trade account narrowed sharply to R2.91-billion in September from a revised R16.75-billion in August, as the import bill nearly matched that of exports, data from the revenue service showed on Friday. Exports in September rose by 18.2%...
Updated 31 minutes ago Centre for the Study of Democracy director Professor Steven Friedman believes the prevailing view that a possible expulsion of the National Union of Metalworkers of South Africa (Numsa) from the Congress of South African Trade Unions (Cosatu) would lead to “a Cosatu...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
In the next 20 years, it was expected that, in Africa, more people would live in cities and towns than in rural areas, United Nations Habitat executive director Dr Aisa Kirabo Kacyira said at the Human Settlements Indaba that took place earlier this month in...
Tough-talking Human Settlements Minister Lindiwe Sisulu has committed government to building 1.5-million low-cost houses over the next five years, telling the Human Settlements Indaba in Johannesburg on Wednesday that the State would achieve this target through the...
Over the past 20 years there has been persistent concern about deindustrialisation in South Africa, as well as the fact that locally produced manufactured products have been increasingly displaced by imports.
Financial agreement for Ghanian independent power producer (IPP) Cenpower Generation Company’s $900-million, 350 MW combined-cycle gas-turbine power plant was finalised earlier this month, paving the way for the project’s construction to begin before 2015 in Tema,...
The revenue implications for South Africa of ‘base erosion and profit shifting’ by corporate taxpayers are firmly in the crosshairs of the Davis Tax Committee (DTC) and Judge Dennis Davis hinted last week that recommendations were being considered to “detect and...