WBHO slashes dividend amid Australian road woes
The construction group’s operating profit has fallen as it battles the underestimated costs of a road project
Wilson Bayly Holmes-Ovcon (WBHO), the largest remaining construction firm listed on the JSE, slashed its dividend by 60% to 190c in the year to end-June, as it battles cost overruns at a roads project in Australia.
Revenue rose 16% to R41bn, but operating profit fell 56% to R561m, with the company saying solid performances in its African and UK operations were overshadowed by Australia.
WBHO had misinterpreted the technical specification of the A$1.8bn project in Melbourne Australia, leading to the cost overruns. The project entails eight high-priority road upgrades, the widening of road and intersection upgrades. WBHO is responsible for the project’s construction works.
WBHO first flagged the cost overruns in February and its share price is down 22.57% so far in 2019 compared with a 20.12% loss for the JSE’s construction and building materials index.
“Despite the losses provided for, market conditions in Australia remain buoyant and the Australian building business and infrastructure business in the western region continued to perform satisfactorily,” the construction firm said.