Raubex revenue up 12% despite difficulties in road construction - CNBC Africa

Raubex revenue up 12% despite difficulties in road construction


by admin 0

Road construction space faces challenges. PHOTO: Raubex

“The past year has been a challenging one for the construction industry, characterised by extremely competitive trading conditions, particularly in the road construction space,” said Rudolf Fourie, chief executive officer of the South African based [DATA RBX:Raubex Group Limited].

“Strong performances from our materials operations and Raubex Infrastructure, which has now successfully established its presence and reputation in the marketplace, have helped mitigate the impact of a difficult local operating environment.”

Raumix, the group’s materials division, revenue increased by 8.2 per cent to 1.62 billion rand and their operating profit rose 18.4 per cent.

Raubex Infrastructure, their division which specialises in areas such as energy, rail, telecommunications and housing infrastructure, posted a dramatic rise in revenue from 1.6 billion rand in 2013 to 7.3 billion rand in 2014.

On the other hand, the company’s road construction division, Raubex Construction, took a knock in their earnings due to intense competition in the road construction and heavy road rehabilitation market, as well as the industrial strike action and abnormal weather days experienced in the second half of the financial year.

Revenue for the division decreased by 3.1 per cent to 1.18 billion rand while operating profit fell 35 per cent to 40 million rand.

Total revenue for the group however increased to 6.33 billion rand while operating profit rose 11.6 per cent to 5.39 billion rand. Their order book increased from 5.23 billion rand in 2012 to 6.55 billion rand this year while headline earnings per share rose 17.9 per cent to 187.1 cents.

A final dividend from income reserves of 35 cents was declared.

(WATCH VIDEO: Raubex H1 HEPS up 0.6%)

Cash generated from operations decreased 12.5 per cent to 7.5 billion rand due to a Competition Commission penalty of 58.8 million rand as well as an increase in the company’s working capital requirements.

(WATCH VIDEO: Fines hitting SA construction sector hard)

“The Group has maintained a strong balance sheet and cash position during the year and looking ahead we will focus on acquisitions that strengthen our vertically integrated model and on growing our current order book with improved margins,” added Fourie.

Internationally, Raubex has continued to secure contracts in other African countries outside of South Africa.

“Good progress has been made in growing our international exposure and we are pleased to have
secured significant contracts in Zambia and Namibia,” he said.

However international revenue decreased 5.9 per cent to 4.3 billion rand due to reduced operations in Zambia.  

The group expects trading condition in the South African road construction industry to remain challenging throughout the year however the sector will improve if the government’s rollout of its infrastructure development plan stays on schedule.

(READ MORE: S.Africa's construction sector confidence down for Q2)

Raubex stated that they will also continue to seek growth and expansion into Africa in both road construction and material handling sectors.