After completing R65m worth of work every day in the first half of the financial year, Raubex — the contracting group specialising in construction supplies, mining services and road and civil engineering — is optimistic that it will be given more work in the second half.
Felicia Msiza, CEO of the JSE-listed company, said the company would not specifically seek more municipal contracts but was gunning for an optimal ratio of more private client and concessionaires’ work in its order book.
The firm reported on Monday that headline earnings per share for the six months to August 31 rose 49.8% to 284.3c, compared with 189.8c during the same period last year.
Revenue increased 29.7% to R10.95bn while operating profit increased 34.7% to R846.2m from R628.4m in the first half of the previous period, with cash generated from operations rocketing 111.5% to R1.54bn.
While its order book had slightly decreased, by 4.1%, to R24.50bn for the six months, Msiza said Raubex had received contracts from the roads operator and maintainer Sanral since the beginning of the financial year, totalling about R2.5bn, with more work expected to be awarded.
At R9.84bn the roads and earthworks division accounted for 40% of work, followed by R8.4bn in infrastructure work with materials handling and mining accounting for 20% of the work at R4.7bn. The construction materials segment was the smallest contributor, bringing in R1.4bn, or 6%, of the work.
Private clients, Sanral and the rest of Africa were the main drivers of the order book growth.
Msiza said the group was working towards an ideal mix of customers, prioritising clenching deals from private clients and concessionaires.
“So we’ve been deliberate as management to actually increase our private clients, and you will see that private clients currently are quite high. We’ve also been deliberate in terms of increasing the work that we do for concessionaires. We want to have a diversified order book and so we’ve been deliberate in increasing concessionaires and private work.”
The growth of private clients at elevated levels grew to R8.8bn from R2bn in 2021.
Raubex is expecting a number of awards in the second half, including from Sanral, as well as projects around planned water and wastewater plants and the announcement of the preferred bidders for the SA border post upgrades, for which it has thrown its hat into the ring after its successful Beitbridge border upgrades.
“From a Sanral point of view and other infrastructure projects, we are anticipating significant awards, which obviously then would increase the order book going forward,” the CEO said. “Our order book timeline indicates the pipeline of work remains strong and consistent.”
Raubex booked almost R850m in interim profits as it cashed in on its ability to capitalise on operational improvements, win new contracts and produce robust cash flow from operations.
The R8.6bn market cap group’s four divisions benefited from heightened construction activity, an increase in the awarding of Sanral tenders, favourable improvements at Transnet, a consistently strong performance in Western Australia and an increase in private clients and international work.
Interim dividend
The infrastructure development and construction materials supply group declared an interim dividend of 94c per share.
Despite the challenges experienced at the Moeijelijk mine, the materials handling and mining division delivered a solid performance with increased production volumes recorded at Bauba’s other mine, Kookfontein.
Raubex said its investment in Bauba continued to diversify its operations and earnings as the demand for chrome ore remained favourable, despite the strengthening of the rand to the dollar.
Msiza was upbeat about the outlook for financial year 2025, citing an uptick of activities in SA thanks to the expected economic development and favourable market sentiment.
With about R10bn of work to execute in the second half of the year, she said Raubex had a strong pipeline of tenders for the rest of the year, which put it in a strong position to take advantage of future tender awards and strengthen the secured order book.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.