Buoyed by its strong order book, Raubex says it is on the prowl for strategic acquisitions to grow its footprint in the Western Australian market and in SA, but the infrastructure development and construction materials supply group cautioned that this would be at a measured pace.
Raubex operates across Southern Africa and Western Australia through its four divisions: materials handling and mining, construction materials, roads and earthworks, and infrastructure. Its total order book rose more than 27% to R25.5bn in the year to end-February.
In its latest annual report, the group said its operations in Western Australia were on an upward trajectory, with the group gaining market share in the region.
CEO Felicia Msiza said that Raubex was looking to grow its business in Western Australia organically, highlighting that its strong balance sheet and healthy cash balance positioned it well to expand its existing operations.
“The outlook for Western Australia remains positive. We are well positioned to capitalise on the infrastructure market in this region, and we continue to do so,” said Msiza. “To replicate our successful SA integrated model, we are expanding our operations into surface dressing. We are also exploring other opportunities in the mining space, specifically pit dewatering.”
Raubex’s net asset value increased to R6.61bn from R5.8bn in the 2023 financial year, while cash generated from operations rose 2% to R1.9bn. It increased its bank facilities, including guarantees and asset-based finance, based on its strong balance sheet.
Australia contributed 19.1% of revenue and 18.1% of operating profit. SA accounted for 75.2% of revenue and 69.9% of operating profit in the year.
Raubex, founded in 1974 and listed on the JSE just before the global financial crisis began in 2007, has grown its earnings for most of the past decade, during which time some of the players along the value chain have battled for survival.
The Centurion-based company, with a R7.7bn market cap on the JSE, said the jump in its order book was driven by tender awards across its divisions.
In SA, however, the group has focused on securing private sector work amid a sluggish rollout of state-funded projects for renewable energy. It has had to contend with myriad headwinds, including delays in awards, the energy crisis, supply chain disruptions and rising inflation. It also highlighted local community unrest causing work stoppages, loss of critical skills, and tender award corruption as risks to its operations.
Group chair Rudolf Fourie said that despite the challenges, Raubex was optimistic that with SA’s rapidly deteriorating infrastructure now “firmly in the spotlight”, government agencies were expected to speed up tendering processes for infrastructure rollout.
He said though the rollout and awarding of large tenders was slow, the group was encouraged by the government promising to invest R943.8bn in infrastructure over the next three years, as Raubex’s expertise placed it in a strong position to benefit from the award of many such tenders.
This sentiment was backed by Msiza, who said, “given the momentum we are now seeing in the market, we remain optimistic about the government’s commitment to infrastructure spend”.
She said the group was “cautiously optimistic” about local prospects, citing constant delays in closing new Sanral tenders.
As a result, the roads and earthworks division’s strategy would continue to focus on other potential clients, such as toll concessionaires, provincial governments — especially in the Western Cape — and private sector companies, including mines.
The CEO said the construction materials division would continue to pursue strategic acquisitions of commercial quarries to increase its footprint throughout SA and invest in exciting new technology bituminous products to enhance the division’s competitive advantage.
The materials handling and mining division — which acquired a 74% stake in Naboom Mining to increase the life of mine of the chrome and PGM operations — is also exploring opportunities to increase mineral resources and improve production efficiencies.
Its infrastructure division was expecting several new tenders to be released to restore infrastructure damaged by floods in the Western Cape and Eastern Cape and KwaZulu-Natal, Raubex said. The business unit has thrown its hat into the ring for the six newly advertised SA border posts.
Raubex’s share price gained the most in seven weeks on Monday, up 5.75% to R42.30.
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