Raubex expects earnings to have fallen 20%
The firm was hurt by a slowdown in demand, particularly in the road construction sector during the second half of its financial year
Listed infrastructure development group Raubex warned that “weak trading conditions” would result in earnings falling at least 20% for the year to end-February.
The group attributed the expected fall in headline earnings per share to a slowdown in demand, particularly in the road construction sector during the second half of the year.
The difficulty Raubex experienced was reflective of a broader slowdown across the construction sector. This could be seen in the FNB/BER Civil Confidence Index remaining depressed at 18 for the last quarter of 2018, and staying below 20 for the sixth consecutive quarter. The index shows the state of business conditions in the civil engineering industry.
Raubex said it adjusted to the slowdown in demand by reducing the size of the affected operations.
Its materials division, however, which contributed 54.5% to total operating profit in the corresponding period, experienced stable operating conditions, and was supported by its diversification into providing material handling services to the mining sector and selling commercial aggregate.
Its infrastructure division experienced favourable conditions in the affordable housing sector and it was also looking to benefit from its work related to the Renewable Energy Independent Power Producer Procurement Programme (REIPPP), in which it has contracts totalling R621m.
Its work with the REIPPP was expected to offset the fall-off in road construction projects amid a declining order book, especially from the SA National Roads Agency (Sanral).