Raubex laments road building sector’s bumpiest conditions in decades
Construction group flags lack of work and violent community unrest affecting a number of sites as causing an unfavourable operating environment
Trading conditions in SA’s road-building industry are the worst in at least three decades because of community unrest and a lack of spending by the state, construction group Raubex says.
“The 2019 financial year has without doubt been the most difficult I have experienced in my 30 years in the SA road construction industry,” CEO Rudolf Fourie said.
“The lack of work, coupled with violent community unrest affecting a number of sites, has caused very unfavourable operating conditions in the SA market.”
In March, Bloomberg reported that an SA engineering contractors’ lobby group had asked the government to better enforce security as criminals had disrupted or vandalised R25.5bn of construction projects across the country.
Armed gangs disrupted the R1.7bn Mtentu Bridge project in the Eastern Cape, while a R2.4bn oil-storage investment project at Saldanha, Western Cape, was halted in March after people demanding to be part of the project burnt down properties, the SA Forum of Civil Engineering Contractors said.
Fourie said Raubex had to “rightsize a number of its operations in order to adapt to the current market conditions”.
Raubex’s basic headline earnings in the year to end-February fell 75% to R103.6m. Revenue was 0.3% down at R8.5bn.
Fourie said the group made “good progress” in the more buoyant affordable housing market. It had also secured “a solid order book” from the government’s renewable energy independent power producer procurement programme.
Meanwhile, “stable results from the materials division” supported earnings.
The group’s total secured order book declined 2.2% to R8bn, 14.1% of which represents contracts in the rest of Africa and Western Australia.
In the road construction and maintenance sector, “prospects remain uncertain”, Raubex said.
The SA National Roads Agency (Sanral) received “a healthy budget allocation” and several large capital projects are expected to be rolled out.
“These budget allocations could however be at risk if the Gauteng Freeway Improvement Project toll collection shortfall is not resolved.
“If Sanral work does return to more normalised levels, there should be a significant improvement in the group’s road construction and maintenance operations.”