WBHO delivered a "positive" set of annual results to June with upbeat market sentiment in Australia offsetting a dismal political economy in SA and a volatile rand exchange rate.

The group said on Tuesday that its building and civil engineering division delivered record revenue at solid margins, while the roads and earthworks division doubled its order book.

In Australia, record activity levels achieved in previous years were maintained, WBHO said, even as its construction materials division battled difficult market conditions.

The group entered the UK market by buying 40% of a London-based concrete frame contractor, which had provided building structures for the city’s Olympic Games in 2012 and the Shard skyscraper.

"We think they are good results in the current [uncertain] market," said WBHO CEO Louwtjie Nel.

The generally bad mood in SA had dented business confidence, he said, although the civil engineering division had been boosted by Sasol projects, regional mining work and a Saldanha Bay oil terminal contract.

Nel said the group had three main growth drivers: roads and earthworks contracts in SA, Australian infrastructure and building projects, and potential work in the UK and Europe through its recent acquisition.

Mish-al Emeran, an equity analyst at Electus Fund Managers, said it was "overall a reasonably good result in my opinion — even though it was slightly below our expectations — considering the challenges facing the broader construction sector at the moment".

The performance of the roads and earthworks division was a highlight considering the overcapacity and increased competition in this segment.

"The 100% improvement in the roads and earthworks order book points to improving trading profit growth next year as it typically has better margins than building and construction."

Emeran said replenishment of the group’s Australian order book was a key risk as it now made up 70% of the group’s overall order book. "But it seems to be holding up reasonably well, with activity levels remaining high."

Revenue for the year rose 4% to R32bn, despite lower mining activity in Mozambique and Botswana. Australia comprised 58% of group revenue, with SA contributing 36%.

Profitability in Australia was affected by a single unprofitable project in Queensland and unrealised foreign exchange losses. As a result, operating profit before nontrading items was well below the previous year’s, while the overall margin dropped from 3.3%, to 3.1%.

"This is a decent set of results and we like the fact that revenues continue to grow despite the prevailing tough conditions in the construction sector," said Dexter Mahachi, an analyst at Momentum SP Reid Securities.



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