Wilson Bayly Holmes-Ovcon (WBHO), the largest remaining construction firm on the JSE, says the recovery in SA’s construction sector is gaining momentum and will help counter the slack in its biggest Australian market where strict lockdown restrictions have interrupted activity.
Founded in 1970 and listed on the JSE in 1994, WBHO said on Friday there had been a noticeable improvement in construction opportunities in building markets across SA, including the emergence of some larger-scale projects.
“This is reflected not only in the 58% increase in the division’s order book but also in the various projects currently being negotiated or bid upon as well as projects in the immediate pipeline,” the company said in a results statement, which showed that it bounced back to profitability in the year to end-June after its first operating loss.
In Gauteng, the volume of secured projects now under construction within the industrial and commercial building sectors, together with contract awards, amounting to R1.5bn secured shortly after the reporting period, are expected to support activity going into the 2022 financial year and beyond,
In the Western Cape, WBHO is the main contractor in the construction of Cape Town’s largest mixed-use development, Harbour Arch, which is expected to be completed in 2023, at a cost of R16bn.
Building and civil engineering, as well as roads and earthworks, form the backbone of WBHO’s operations in SA, which over the past decade has been a tough operating space for bigger construction companies in particular given the dearth of big-ticket projects.
WBHO’s geographic diversification over the past decade has shielded it against the slump in activity in SA. Other major players Group Five and Esor delisted from the JSE in 2020 after they each went into business rescue, a form of protection from bankruptcy. Basil Read is still undergoing the process.
Aveng and Murray & Roberts, the other former leading construction companies, have sold their local building assets to focus on mining and engineering contracting, respectively.
WBHO said it was seeing opportunities within the renewable energy and mining sector in SA as a result of higher commodity prices.
“Roadwork projects, followed by infrastructure projects for the mining and energy sectors, continue to be the primary drivers behind activity in SA, accounting for 82% of total revenue,” WBHO said.
The company’s total order book in SA stood at R11.8bn in the year to end-June, from R8.48bn previously. However, the group order book fell to R27.88bn from R35.36bn.
Headline earnings per share were at R6.20, from a headline loss of R9.23 per share the year before, as a result of reduced losses at its Western Roads Upgrade project in Australia, which has since been completed. SA operations improved revenue and profitability after the easing of lockdown regulations since the first half of 2020.
WBHO restored a final dividend of R2.05 after none was declared a year ago. On Friday, its shares on the JSE gained 2.04% to R120.45, having risen 30% so far in 2021, giving it a market capitalisation of 7.2bn.
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