Raubex Group’s secured order book of R20.04 billion and contract opportunities still pending adjudication were significant in value and encouraging from a market perspective, CEO Felicia Msiza said yesterday.
The market welcomed the annual results, with its shares surging 6% in morning trade to an intraday high of R25.64. Later in the day the share moderated lower.
The group’s four divisions – Materials Handling and Mining; Construction Materials; Roads and Earthworks; and Infrastructure – lifted revenue 32.2% to R15.31bn in the year to February 28, supported mainly by SA National Roads Agency projects in KwaZulu-Natal, the Beitbridge Border Post project in Zimbabwe, and operations in Western Australia. Full year results for Bauba Resources were also consolidated for the first time.
Msiza said the results were “exceptional” with record earnings in her first year as chief executive of the group, reflecting solid execution of the strategy.
“Looking ahead, our focus is on delivering excellent quality to customers, securing additional high-margin infrastructure projects, containing costs and enhancing efficiencies, whilst building on our diversification strategy,” Msiza said in a statement.,
The Western Australian operations contributed 19% to operating profit. Operating profit increased 35% to R1.28bn. Headline earnings per share rose 32.1% to 392.8 cents. Cash from operations before finance charges and tax was strong at R1.96bn from R800.1 million, mainly due to higher profits at Bauba, the Australian entities and the Beitbridge Border Post project. A final dividend of 76c was declared, up from 54c in 2022.
“Raubex’s Infrastructure division is well positioned to participate in the government’s drive to increase power generation capacity, and we have seen an uptick in activity in the private renewable space with a number of tender submissions,” the group said in the results.
A balance of plant contract for three wind power plants in the Western Cape was signed recently with a combined value of R2.1bn, which would replace some of the lost earnings from the Beitbridge contract going forward.
The Roads and Earthworks division, having secured a significant base load of work, would focus on executing these contracts while looking for higher margin opportunities.
Numerous contract opportunities had been tendered but were pending adjudication. These projects, if awarded, could benefit aggregates production and supply from the quarry operations and would lead to increased asphalt and bitumen supply in the Construction Materials Division.
The Materials and Mining Division would seek opportunities to increase its specialised mineral resources and to improve production efficiencies.
The Construction Materials Division would pursue acquisitions of commercial quarries to increase its materials base.
The group also sought to participate in public private partnership (PPP) projects, which provided an opportunity of good returns with limited competition.
Participation in other border post projects would be explored with a similar risk profile to that of the Beitbridge Border Post project.
“The group gained valuable experience in this project, delivering a high-quality product on time. Raubex continues to adopt a more conservative strategy to working in the rest of Africa and will only consider projects with suitable risk and reward profiles.”
The mining services project for Namdeb Diamond Corporation in Namibia and the Senqu River Bridge joint venture in Lesotho were two such projects, and they were expected to contribute nicely to revenues and profits, the group said.
The outlook for Western Australia was positive, with the construction sector continuing to show high levels of activity, the group said.
BUSINESS REPORT