Aussie rules for WHBO


Aussie rules for WHBO

Published Date: 2018-09-05 | Source: Stephen Gunnion | Author: Stephen Gunnion

Aussie rules for WHBO

The engineering and construction group is making a larger share of its revenue in Australia as the local market stagnates

Wilson Bayly Holmes-Ovcon's shrinking exposure to South Africa has saved it from the fate of many of its local peers in a shrinking sector. The engineering and construction group says activity in the SA building market continues to subside, with a knock-on effect on the construction materials business. Combined with low levels of public infrastructure spending, there's been a significant decrease in overall activity within the sector. It says activity in its targeted markets in the rest of Africa remains relatively stagnant.

South Africa contributed just 30% to revenue in the year to end June, down from 36% last year, with almost two-thirds of the R35 billion in turnover coming from Australia. Operating profit jumped 32% over the year to R1.03 billion. Heading earnings per share rose 8.1% to 1 414.6c and it's maintained its full-year dividend at 475c per share.

Revenue growth in Australia was supported by both its building and infrastructure businesses. It generated losses in the UK due to a big decline in revenue after some projects were slow to get off the ground and it implemented a turnaround strategy for the business. It has since bought a controlling 60% stake in UK contracting business Russells Limited and a 31.7% equity-accounted interest in Russell Homes to further diversify its earnings platform. It said it had identified the UK as offering the most potential at acceptable levels of risk.

The group's order book at year-end was 10% higher at R49.2 billion, with two-thirds of the book sitting in Australia, 18% in SA, 13% in the UK and 3% in the rest of Africa. That excludes Russels' R4.6 billion order book.

Its shares fell 4.7% to R142 yesterday.

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