Construction group Raubex achieved solid results during the year ended February 28 as a result of its infrastructure division coming on stream, offsetting the impact of the challenging trading conditions in the construction sector, Raubex CEO Rudolf Fourie told Engineering News Online on Monday.

He pointed out that this had been the infrastructure division’s first full operating period, stating that it had “performed well” and was “why Raubex [was able to achieve] the same type of results as the previous year”.

The company's headline earnings a share increased by 17.9% to 187.1c during the year, while earnings a share were up 17.2% to 191.3c.

The company’s revenue increased by 12.2% to R6.33-billion during the year ended Febuary 28, with operating profit up 11.6% to R539.9-million.

Raubex said the increase in operating profit was mainly owing to the R58.8-million provision made for an administrative penalty payable to the Competition Commission during the prior year.

Normalised operating profit, excluding the effect of this provision, decreased by 0.5% from R542.6-million to R539.9-million, while profit before tax increased by 12% to R534.5-million.

Cash flow from operations declined by 12.5% to R751.4-million while the capital expenditure for the year amounted to R483.3-million. The decrease was largely attributable to the payment of the R58.8-million Competition Commission penalty as well as an increase in the group’s working capital requirements during the year, the company said. 

Meanwhile, revenue for the group’s construction division decreased by 3.1% to R1.18-billion, with operating profit down 35.1% to R40-million. On the other hand, Raubex’s infrastructure division reported an increase in revenue and operating profit to R730.8-million and R37-million respectively.

Fourie said the full-year results were in line with expectations.

“Unfortunately, the strike we had in September did have an impact on the results, but, besides the strike, the results are in line with expectations,” he said.

Fourie also pointed out that the group’s materials division performed well during the period under review.

The division, operating as Raumix, increased its revenue and operating profit during the period under review by 8.2% and 18.4% respectively.

“It is really our commercial crushers that have shown growth in both revenue and profit and, for us, that is a good sign as it shows that the economy is starting to tick up,” Fourie noted.

Further Raubex’s order book had also grown during the year from R5.23-billion to R6.55-billion, with Africa now making up 26% of its entire order book.

“We believe this is a better mix than it previously was. Our exposure is different. Previously, 45% of our [order] book was [made up of] South African Roads Agency [contracts]. Now those contracts amount to 30% [of our order book] for the same volume [of work],” Fourie said.

The company declared a final dividend of 35c a share.

FUTURE
Over the course of the next year, Raubex intended to focus on improving its margins in the construction space, Fourie said, stating that the division came in at a 3% margin for the period, which was below the 5% to 6% that was targeted.

“This [weaker performance] was mainly owing to the strike in September and the impact of weather in KwaZulu-Natal during November and December,” he explained.

Further, Fourie said the construction market conditions were expected to remain similar to what they currently were over the next six months.

However, he pointed out that there had been much talk about significant planned infrastructure spending by government and the company was hoping that some of these projects would start to roll out during the second half of the year.

Fourie also noted that Raubex currently had two pending acquisitions before the Competition Commission for approval that, if executed, would lead to geographical diversification and contribute to the earnings of the company’s materials and asphalt operations.