Construction group Wilson Bayley-Holmes Ovcon (WBHO) has reported a loss representing almost a third of its R5bn market value for its half year to end-December, with the group still struggling with both Covid-19 disruptions and the fallout of its Australian unit’s collapse.
Group revenue decreased by 22% to R16bn in the six months to end-December, with WBHO reporting a R1.5bn loss, from profit of R43m previously.
The group’s subsidiary in Australia, Probuild, incurred material operating losses of $63m (R686m) as it struggled with the pandemic and loss-making contracts. WBHO also wrote down the goodwill of the unit — or a valuation of its brand — by almost R500m.
WBHO entered Australia in 2000, with the division accounting for about half of revenue. Like many of its peers, WBHO had looked offshore for growth amid an industry-wide slump that has prompted the delisting of former giants, including Group Five and Esor.
WBHO had tried shifting the strategy for the division, but says the Australian construction environment has become increasingly competitive and contractual, and the potential risk on megaprojects outweighed the margins on offer.
Covid-19 had also added additional pressure, including a need for employees to self-isolate, as well as absenteeism related to testing and vaccination requirements.
WBHO has provided about R2bn to the struggling division over the past four years, but a proposed $200m sale of its 88% stake in Probuild fell through in 2021, reportedly blocked on national security grounds because the buyer would have been a Chinese company.
WBHO said on Tuesday that it was facing a challenging period as it deals with the consequences of ceasing funding to its Australian operations, but the outlooks of its African and UK operations were positive, and the waning of Covid-19 globally should hopefully limit economic disruption.
“Declining government support for economies, rising interest rates and growing business confidence all indicate a sense of normality slowly returning to global markets, however, meaningful growth will probably remain muted over the short-term,” WBHO said.
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