Infrastructure development group Raubex has warned that interim profits have fallen by about R154m as construction activity was brought to a halt in SA and parts of Africa by the Covid-19 pandemic.
The group is, however, optimistic as the SA government embarks on infrastructure projects to simulate the economy, while it also had about twice as much cash as debt in August.
Raubex expects a headline loss per share of between 17.6c and 29.3c in the six months to end-August, from headline earnings per share of 58.6c previously. This implies a headline loss of up to R53m, from R101m in profit in the prior comparative period.
The majority of Raubex operations in SA were able to restart under level 4 lockdown status, which began on May 1, with a gradual increase in efficiencies to near normal levels of operation towards the end of July, the group said.
All of the company’s SA operations are now fully operational, with Raubex saying it was also encouraged by the government’s drive to implement infrastructure projects. SA generates about 80% of the group's revenue.
The Presidential Infrastructure Co-ordinating Commission has designated 18 strategic projects, including 50 sub-projects, with Raubex saying it would be closely monitoring developments related to these in coming months.
The group has also received a R1.48bn contract from the SA National Roads Agency for road upgrades in Gauteng, which extends for a contract period of 45 months.
Independent economist Roelof Botha says there are reasons to be upbeat about the prospects for SA's construction sector, including recent hardware sales data. The Reserve Bank has also indicated that interest rates are unlikely to rise until late 2021, which is “unbelievably important,” he said.
Between March and July, construction and building materials have outperformed the other eleven types of wholesalers by a considerable margin, said Botha. A further indication of a recovery of construction and building activity is also visible in retail trade sales for hardware, paint and glass, which increased 11.6% between March and July, he said
“In this quarter in particular, it looks like the foundations are going to be laid for construction sector growth in 2021,” Botha said.
Internationally, in Western Australia, Raubex said its operations performed well during the period and were not materially affected by Covid-19.
In the rest of Africa, Botswana imposed a 48-day lockdown that ended on May 20 2020, during which time all operations in the country were suspended, while in Mozambique and Namibia, materials handling and crushing operations experienced cross-border logistical issues that affected production efficiencies.
In Cameroon, operations were more severely affected by Covid-19 challenges, including travel restrictions and quarantine periods personnel were required to comply with in SA and Cameroonian jurisdictions, Raubex said.
Raubex said it also had confidence in its finances, with an average daily balance of R1.5bn in cash during August, and R844.4m in debt at the end of that month.
The group had received R138.1m during the period after it disposed of its property interests.
In afternoon trade on Thursday, Raubex’s share was up 2.38% to R20.23, giving the group a market capitalisation of R3.7bn.
Update: October 8 2020
This article has been updated with additional information
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