Road builder Raubex feels the squeeze of state belt-tightening
Plunging earnings, retrenchments and a slashed dividend characterise the first half, though the group’s secured order book has grown 12%
Construction group Raubex felt the squeeze as the government tightened its belt in an attempt to keep the budget deficit within reasonable limits.
Headline earnings per share plummeted 72.8% to 36c in the six months to end-August as the SA National Roads Agency (Sanral) cut back on spending, the company said on Monday.
It slashed its interim dividend to just 12c per share, from 45c a year ago.
The construction division, which is made up of road surfacing and rehabilitation, and road construction and earthworks, felt the effect of government austerity measures.
“We have continued to experience very challenging conditions in the SA construction industry, particularly in the road construction sector, where the low volume of work experienced during the first half of the year has resulted in the group’s asphalt and bitumen supply operations being rightsized in order to adjust to the current level of demand,” CEO Rudolf Fourie said.
About 280 employees were retrenched in the road surfacing and maintenance subdivision, costing the group R13m. In road construction and earthworks, 29 employees were retrenched at a cost of R1.8m.
The materials and infrastructure divisions fared better, though not enough to offset the slack in the construction division.
Operating profit from the materials division was up 11.8% to R191.8m, off revenue of R1.52bn, which was up 10% on the year-ago period.
The division is made up of commercial quarries, contract crushing, and materials handling and processing services for the mining industry.
The infrastructure division grew operating profit by 37.5% to R26.9m, as revenue rose 55.5% to R1.06bn.
The infrastructure division experienced favourable conditions during the period and continued to expand its affordable housing and commercial building operations, the results statement said.
The group’s secured order book grew 11.9% to R8.41bn, of which 23% came from outside South Africa.
Sanral’s order book dropped 61.4% to R562.7m, from R1.46bn a year before.