Australia weighs on WBHO
Australia weighs on WBHO
Published Date: 2021-03-03 | Source: Stephen Gunnion | Author: Stephen Gunnion
The construction group has been negatively affected by more unidentified costs to complete a big roads project in Melbourne.
Wilson Bayly Holmes-Ovcon says its operations in Africa and the UK produced solid results for the first half of its financial year amid a challenging environment. Despite further losses in its infrastructure business in Australia, it says both its Australian building operations and the wider group returned to profitability over the six months to end-December.
The construction group reported an 11% fall in revenue to R20.4 billion as a decline in revenue in South Africa was partially offset by increased revenue from its rest of Africa operations, largely due to strong activity in Mozambique. Revenue from Australia declined by 27% in Australian dollar terms, impacted by lockdown restrictions implemented in Melbourne, but also as a result of strict project selection aimed at securing more manageable and lower-risk projects for the right clients. Activity from its UK operations also declined, resulting in a 22% decrease in revenue from the region in pound terms.
WBHO said the impact of lower foreign revenues from Australia and the UK was partly mitigated by the weaker rand. Operating profit before non-trading items declined by 58% to R111 million, mostly as a result of the negative effect of Covid-19 on its Australian building business and an additional loss of A$28 million (R328 million) provided for on its Western Roads Upgrade (WRU) project in Melbourne. The combined profitability from its remaining operations was broadly in line with the comparative reporting period, it said.
It reported an attributable loss of R281 million, down from earnings of R213 million previously. Earnings per share (EPS) decreased by 92% to 32c. Headline EPS came in 80% lower at 81c. It hasn't declared an interim dividend. It said cash reserves in excess of R5 billion were successfully maintained and were comparable with the cash reserves of the prior reporting period.
The company said it planned to target opportunities where it found them and had observed increased activity within the mining sector in South Africa and Australia. Public sector infrastructure spending had also been fast-tracked with many shovel-ready projects accelerated across all of its operations. In SA, it said there had been a noticeable increase in the availability of new projects from state-owned entities including Sanral, Eskom, Transnet, Prasa and Rand Water as well public-private partnership projects for serviced accommodation.
At the end of December, its order book totalled R35.8 billion, up from R35.4 billion in June, with more than half of the activity in Australia.
The company's shares closed 1.4% up at R99.34 yesterday.
$JSEWBO: 1H21 in-line with guidance. Order book steady. Has seen an increase in activity in mining and acceleration in public sector spending. In SA, there has been a "noticeable increase" in new projects from SOEs. Renewable energy projects under Eskom also picking up.-- Chantal Marx (@chantal_marx) March 2, 2021
No sign of global infrastructure stimulus as yet. WBO's order book at 31 December 2020 pretty much the same as at 30 June 2020.-- Dave Hazelwood (@hazelwood_dave) March 2, 2021