Photo by: Duane Daws
Infrastructure development group Raubex expects to report an up to 10% increase in its earnings a share and headline earnings share for the six months to August 31.
The JSE-listed company noted that the rise, which stemmed from favourable operating conditions in its materials division, would translate into earnings a share of 103.5c to 113.9c apiece, while headline earnings a share would rise to 101.6c and 111.8c apiece.
Raubex added that all its prior-year acquisitions had now been concluded and bedded down well, making positive contributions to earnings.
“The outlook for the commercial quarry operations and the materials handling and processing operations remains positive,” it said.
Also contributing to the positive rise in earnings, Raubex reported that the volume of work out on tender in its road construction division was healthy and, although conditions remained competitive in the sector, the group maintained its order book at suitable levels while following its strategy of selective order book replacement at better margins.
Its road construction and earthworks segment saw margins improving during the period, as the company witnessed a better quality order book, while its teams continued to focus on efficient work execution.
However, Raubex’s road surfacing and rehabilitation segment and its asphalt production operations, in particular, experienced a challenging period as a result of a severe bitumen supply shortage, owing to unplanned refinery shutdowns and aggregate supply issues, both of which had been resolved.
Its infrastructure segment also experienced a slow start to the year, mainly owing to the effect of the lower commodity prices on the capital expenditure plans of the group’s mining clients and also the timing of the execution of solar energy projects.
Nevertheless, with site establishment on secured solar work completed towards the end of the first half, the group was expecting a stronger second-half performance from this division as these projects are executed. Prospects for future work in the solar energy sector were also encouraging.
In Zambia, Raubex’s two link 8000 contracts were progressing well operationally, but the company pointed out that the significant devaluation of the Zambian kwacha during September would impact the future profitability of these contracts, should the currency remain at current levels.
In light of this, the group had constructive engagements with its client, the Zambia Roads Development Agency, and was in the process of negotiating measures to mitigate the exchange rate risk and support the successful completion of the contracts.
These negotiations were ongoing.
Raubex would publish its results on November 9.