Wilson Bayly Holmes-Ovcon (WBHO) on Tuesday reported growth in the order books of all its divisions for the six months to end-December after completing its exit from the troubled Australian market.
The construction company said revenue from continuing operations rose 15% to R10bn, while profit as measured by headline earnings per share — which strips out impairments and one-off items — rebounded to 630c from a headline loss of 1,613c per share a year earlier.
The total order book rose by 19% to R26.5bn.
Deteriorating conditions in Australia that had been draining its financial performance prompted WBHO to withdraw all further financial support in late February 2022, resulting in those operations being placed in administration.
“The focus by the group to finalise its commitments and exposure in Australia within 12 months has required extensive time and effort, but brings to a close this difficult chapter,” CEO Wolfgang Neff said.
“Since discontinuing operations in Australia, the Australian construction industry continues to experience a difficult operating environment while the group’s continuing operations show exceptional promise, indicating that the decision to discontinue operations in Australia was correct.”
The group’s enhanced performance was driven primarily by the roads and earthworks division which achieved 51% growth as local roadwork activity grew by 50%, despite a reduction in mining and energy infrastructure activity.
The division has secured new projects amounting to R5.7bn since December 31, including R4.8bn in new roadwork projects from Sanral and a R500-million dam for Umgeni Water, the group said. A further R1.3bn of mining and energy infrastructure projects has been secured in the rest of Africa.
Similarly, the building and civil engineering division has secured projects valued at R816m since December 31.
WBHO said its building segment undertook the bulk of its work in large-scale anchor projects across each of the industrial building and warehousing, commercial office and residential sectors during the review period.
The commercial office sector contributed 45% of revenue, with residential accounting for 15%. The industrial and warehousing sector contributed 32%, driven mainly by the construction of a new logistics and distribution centre for Fortress, where Pick n Pay will be the anchor tenant.
Other projects in that segment warehousing sector include construction for SAB InBev at its Rosslyn plant in Tshwane and a newly awarded contract to build a manufacturing facility supplying automotive parts to BMW, also in Rosslyn.
The collective additions saw revenue from the building and civil engineering division increase by 31% over the preceding period, while operating profit increased by 51% at an operating margin of 5%.
While revenue from the UK was flat, WBHO’s order book grew by 19% thanks to to new work within the Byrne Group that offset the decline in the order book of Russell WBHO in Manchester.
Still, the overall operating margin in the UK decreased to 2.2% from 3.5% as fixed overheads were maintained within Russell WBHO in anticipation of an imminent upward shift in the Manchester construction market.
“Based on the current work on hand and near-term opportunities, the outlook for the African operations indicates a healthy growth phase, while the outlook for the UK operations remains positive,” Neff said.
WBHO’s share price closed 4% higher at R104.
Correction: February 28 2023
An earlier version of this story referred to the CEO as Louwtjie Nel, when it is in fact Wolfgang Neff. Nel is the company’s chair.
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