http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.14Change: -0.15
R/$ = 12.05Change: -0.20
Au 1200.03 $/ozChange: -6.12
Pt 1139.50 $/ozChange: -16.00
 
 
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 Tenders Suppliers Directory Research Jobs Announcements Letters 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|Contractor|Flow|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Roads|South African National Roads Agency Limited|Transnet|Africa|Australia|South Africa|Big Mining Groups|Energy|Flow|Maintenance|Louwtjie Nel|The 2010 World Cup
Construction|Engineering|Africa|Contractor|Flow|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Roads|Transnet|Africa||Energy|Flow|Maintenance||
construction|engineering|africa-company|contractor|flow-company|mining|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|maintenance|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 (150 word limit)
 
 
 
 
 
 
 
 
Other Green Building News
JSE-listed Redefine Properties on Thursday said it had completed the R4.1-billion acquisition of the Leaf Capital portfolio of properties, a deal which significantly boosted the company’s Western Cape office portfolio. This included Black River Park, which offered 74...
WSP Green by Design, a division of construction company WSP Parsons Brinckerhoff Africa, achieved Gauteng’s first 3 Star Green Star rating under the Existing Building Performance (EBP) pilot rating tool for its WSP House, in Bryanston, Johannesburg. The Green...
Article contains comments
More
 
 
Latest News
South African mining and energy adviser Ted Blom has raised a litany of concerns about the state of power utility Eskom and has warned of runaway costs and shortfalls in coal and water, as well as rail capacity. Blom was surprised by the recent buoyancy shown by...
JSE-listed Astrapak will sell specialised packaging systems manufacturer Knilam to Mapflex SA for R17.7-million. The proceeds would be used to reduce Astrapak’s current level of gearing.
The last of the 26 mooring units comprising the Port of Ngqura’s automated mooring system (AMS) have arrived at the port and are expected to improve port efficiency and safety, further driving the Transnet National Ports Authority’s (TNPA’s) objective of establishing...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96