The local road construction industry will remain under pressure in the short term, with real relief only possible once the South African National Roads Agency Limited (Sanral) starts long-delayed e-tolling on the Gauteng freeways, says Raubex Group CEO Rudolf Fourie.
Fourie says Sanral has indicated that it will not build any of the additional toll roads planned before e-tolling has started on the almost 200 km of freeways upgraded so far under the Gauteng Freeway Improvement Programme.
He is hopeful tolling will start in the next six months, but notes that this hope has been dashed often over the last few years.
One other factor that can also potentially boost the local road-building sector is the push for Sanral to take over the respons- ibility for a number of provincial road networks.
“That will help us but, until then, we are forced to look to Africa to tide us over,” said Fourie.
At home, road specialist Raubex battled low margins in the first six months of its financial year, as there were simply too many companies competing for a limited number of contracts. The number of tenders also remained the same in recent years, says Fourie, but the number of competitors soared.
Around ten road-building companies have already been liquidated, or have had to apply for business rescue in the last two years, but additional attrition is still required.
Fourie expects margins in the local road construction industry to remain under pressure for at least the next six months.
“Again, we hope that our international order book can make up for this pressure.”
Raubex earned around 15% of its revenue in the rest of Africa.
Another diversified earner was the com-pany’s 18-month-old infrastructure business, which earlier this months reported a R882.3-million order book.
The division was established for Raubex to attain a more balanced portfolio of work, and specialises in disciplines outside the road construction sector, including energy, with a specific focus on renewable energy, rail, telecommunications, pipeline construction and housing infrastructure.
Fourie says the infrastructure division currently makes up 10% of Raubex’s revenue, with the short-term aim to achieve a R1-billion order book.
New on the horizon this year will be a possible acquisition in the materials space.
“We have signed a memorandum of under- standing and also await Competition Com-mission approval.”
Raubex reported a 14.6% increase in revenue to R3.22-billion for the six months ended August 31, compared with the same period last year.
Operating profit was, however, down 5.6% to R274.5 million, as an improved performance from the mining and commercial quarry operations was offset by continued challeng- ing conditions in the road construction industry.
The order book was at R6.2-billion, up from R5-billion in 2012.