Raubex rides on renewable projects

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Raubex rides on renewable projects

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Published Date: 2019-11-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

Raubex rides on renewable projects

The group has reported a strong rebound in earnings thanks to a number of renewable energy contracts that are underway.

Raubex has reported a surge in first-half earnings thanks to growing work in renewable energy projects. The construction and road-building group says it has also stopped the bleeding at its roads and earthworks division after cutting back on its excess capacity and says it's now better positioned to manage the low volume of construction work on hand.

Despite softer earnings from its material division, which includes commercial quarries, contract crushing and materials handling and processing services for the mining industry, it said it still contributed two-thirds of group operating profit. Revenue at the division fell by 11% to R1.36 billion over the six months to end-August and operating profit fell by a quarter to R144 million. It blamed the decline on community unrest that affected a number of its commercial quarry operations, the completion or some contracts in the diamond mining sector in Namibia, and the transaction to new handling contracts in the coal mining sector, which resulted in initial establishment costs.

The roads and earthworks division reported a 7.7% decline in revenue to R1.876 billion and and operating loss of R5.1 million due to retrenchment costs and a loss-making roads contract. It said it continued to focus on building roads operated by private concessionaires as public sector spend on roads maintenance remained low.

The infrastructure division experienced strong growth during the first half compared to the previous corresponding period, mainly as a result of work related to its participation in the Renewable Energy Independent Power Producer Procurement Programme. It reported consistent results from its affordable housing and commercial building operations. Revenue increased by 21% to R1.28 billion and operating profit almost tripled to R77.3 million.

Group revenue declined by 1.9% to R4.4 billion but operating profit jumped 37% to R216 million. Earnings per share (EPS) rose 81% to 64.6c and headline EPS climbed 64% to 58.6c. It raised its interim dividend by 83% to 22c per share.

Its order book increased by 8% to R9.08 billion, with 12.5% consisting of contracts outside SA in the rest of Africa and Western Australia.

Despite the right-sizing initiatives, Raubex said it had maintained sufficient capacity to palpitate in an anticipated improvement in the construction sector.

Some of the opportunities that had started to come to the market for tender included extensive upgrades to the N2/N3 road network in KwaZulu-Natal, as well as upgrades to OR Tambo International Airport and Cape Town International Airport. It said it would also continue to look to the rest of Africa for growth and higher margins, with some large project opportunities currently being negotiated in southern African jurisdictions, including the Beitbridge border post upgrade in Zimbabwe.

Its shares closed unchanged at R19.74 yesterday.





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