http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.24Change: -0.04
R/$ = 10.62Change: -0.06
Au 1299.43 $/ozChange: 1.87
Pt 1481.50 $/ozChange: 2.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 03, 2012

WBHO edges ever more outside SA, FS roads payment starts to flow

Back
Construction|Engineering|Africa|Energy|Flow|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Roads|South African National Roads Agency Limited|Transnet|Africa|Australia|South Africa|Big Mining Groups|Energy|Flow|Mining|Louwtjie Nel|The 2010 World Cup
Construction|Engineering|Africa|Flow|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Roads|Transnet|Africa||Energy|Flow|Mining||
construction|engineering|africa-company|energy-company|flow-company|project|projects|renewable-energy|renewable-energy-company|resources|roads|south-african-national-roads-agency-limited|transnet|africa|australia-country|south-africa|big-mining-groups|energy|flow-industry-term|mining|louwtjie-nel|the-2010-world-cup
© Reuse this



Wilson Bayly Holmes Ovcon (WBHO) earned around 60% of its 2012 financial year revenue outside South Africa, said CEO Louwtjie Nel on Monday, up from 52% in the previous financial year, which was the first time in the 41-year history of the construction group that the majority of its revenue was generated outside the country.

WBHO revenue for the year ended June 30 increased by 21.2%, from R14.8-billion in the previous year to R17.9-billion. Profit for the year dropped 9.6%, to R713-million. Operating margin declined from 7.4% to 5.5%.

Nel regarded the revenue growth outside South Africa as “disappointing, as this is home, and this is where we want to be, but we have to go where the work is”.

He added that the company’s future South African earnings “won’t be going much lower. We are pretty much in good balance now”.

However, Nel also noted that WBHO did not have a strategy to earn a certain percentage of its revenue in a certain geographic area – “our strategy is to find the best work we can”.

The current WBHO order book comprised 67% of foreign projects, with the balance of work located in South Africa. The order book for the group at July 1, 2012, was R20.9-billion, compared with R16.2-billion at July 1, 2011 – an increase of R4.6-billion.

“There is a big order book in Australia at the moment,” said Nel.

The negative effect of doing so much business in Australia, however, was that margins were tight there. Nel was hopeful of some improvement going forward.

With big mining groups also cutting down on capital expenditure as global financial jitters continued to spread, Nel admitted that WBHO’s exposure to Australia was “a risk” for the company.

He pointed out, though, that the group was only “a small player” in Australia’s mining industry, involved largely in upgrade and maintenance projects.

“We just upgraded from our bakkie. We have a lot of potential. We are not an engineering, procurement and construction contractor in that field.”

Nel said he could imagine the Australian resources boom potentially cooling down, but that WBHO was confident of a “reasonable run” as it could still secure some market share from the “big guys”.

As for the local market, Nel believed that some segments had bottomed out, with a slight improvement in margins, but noted that it would “take a long time to really come back. In the short term, we don’t expect it to improve much”.

WBHO would “do well to stay in the 5% to 6% [margin] bracket”, he added, especially as Australia had traditionally been “below 3%.”

Nel said the local construction industry was probably somewhat “spoilt” by the boom in the run-up to the 2010 World Cup, with contractor margins after tax before this “always” between 3% and 4% – a level the market was again closing in on.

“There is potential in South Africa. We can see the work coming in from the private sector and a little bit on the South African National Roads Agency Limited (Sanral) and Transnet side.”

He added that the private sector was “keeping most of the contractors alive at the moment”, with the industry still in a bit “of a survivalist mode”.

However, Nel noted that WBHO was also a bit “more bullish” on government spend than a year ago.

“We see two, three new tenders floating through our offices each week for roads, either provincial or for Sanral. We have a lot of pipeline work on the go. If these renewable energy projects go, it will make a huge difference.”

He said the potential work from Transnet also seemed promising, but that this was still “a year away”.

Nel said he was hopeful of enough public sector work coming to market so that “everyone could get a fair share”.

“I think we have to be patient and, in about a year to 18 months, we we will hopefully really see the work flow through and then we can get going again.”

Competition Commission Provision, Free State Roads Update
One problem area for WBHO in the past financial year had been nonpayment on a Free State government roads project, which had seen work suspended in October 2011.

However, Nel said on Monday that WBHO had reached a settlement with the provincial government and that work on the project would restart once payment was received.

He said the company had reached a payment agreement “in writing” in a settlement process which had also involved National Treasury. WBHO had received “a small portion” of the payment owing to the company at the beginning of August.

Nel did not want to release the quantum of money WBHO was to be paid, saying only that he was confident it would get 100% of the “finally negotiated sum”.

“We think we got a fair deal.”

As for another thorny issue, namely the South African Competition Commission’s investigation into collusion in the local construction industry, Nel said WBHO had provided for possible penalties in this long-running process, unlike last year, as it now “had a better idea what that provision should be”.

Nel said the group hoped for finality on the issue in the “next two to three months”.

He did not want to quantify the value of the provision as WBHO had not yet agreed on this with the Competition Commission, saying only that the group had provided for its “best estimate” of the settlement amount.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines
 
 
 
 
 
 
 
 
Other Infrastructure News
The Gauteng Department of Infrastructure Development (DID) has been allocated R4.9-billion to implement capital and maintenance projects, mainly for the health and education departments, in the province. Delivering her Budget Vote, on Tuesday, the MEC for...
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’...
Rob Davies
South Africa will use the upcoming US-Africa Leaders' Summit, which will also encompass the 2014 edition of the Africa Growth and Opportunity Act (Agoa) Forum, to appeal for a 15-year extension of the nonreciprocal trade arrangement, as well as South Africa’s...
Article contains comments
Article contains comments
Article contains comments
More
 
 
Latest News
The Medupi power station project
Electricity producer Eskom has, for the first time, offered a detailed timeline for the synchronisation of Medupi Unit 6, which is officially scheduled for December 15, 2014. Addressing a joint meeting of the Portfolio Committees on Public Enterprises and Energy on...
As South Africa had largely exhausted the use of traditional mechanisms to stimulate the fiscus, government now needed to swing its focus to dealing with the internal structural issues that had, thus far, prevented the country from unlocking its true economic value,...
The Western Cape High Court will on Monday hear a Sanral application for information about the proposed N1/N2 Winelands Toll Highway Project to be kept secret, the City of Cape Town said. The application would be heard behind closed doors, mayoral committee member...
More
 
 
Recent Research Reports
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.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
 
 
 
 
 
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
GARYN RAPSON Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will open the door for court battles to determine who will be held liable for the remediation
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks