Raubex warns of huge decline in earnings due to tough industry conditions
The construction group says lower spend from Sanral and delayed contract awards from provincial government have affected its subsidiaries
Construction group Raubex said on Thursday that weak conditions in the local construction industry have taken their toll on its performance.
The company expects its headline earnings per share (HEPS) to drop by up to 80% in the six months to end-August, far worse than its initial guidance to the market.
Many of Raubex’s competitors have fallen foul of the weak conditions in the industry.
Basil Reid Holdings and Esor are in business rescue, the legal route the stave off liquidation while Aveng and Group Five are battling for survival.
Raubex said lower spend from the South African National Roads Agency and delayed contract awards from provincial government affected its subsidiaries, both in the road construction operations and in the road rehabilitation and maintenance operations.
"The subsidiaries which supply asphalt and bitumen both to internal Raubex contracts and to the external road maintenance market have been particularly hard hit," the company said in a statement. It has responded by cutting back capacity during the period.
But its infrastructure division fared better, as it expanded its affordable housing and commercial building operations, according to the updated trading statement. It also secured work in the renewable energy sector related to the renewable energy independent power producer procurement programme.
Its materials division continued to experience stable conditions, the company said.
The materials division is made up of commercial quarries, contract crushing, and materials handling and processing services for the mining industry.