WBHO shares tumble on warning of first loss for construction giant

WBHO flagged a wider-than-forecast annual loss on Monday, sending the shares in one of SA’s biggest construction companies tumbling nearly 6%.

The company said headline earnings loss per share, the primary measure of profit that strips out certain one-off items, would be 3,686c-3,717c in the year to end-June, swinging from headline earnings per share (Heps) of 619.5c a year before.

This will mark the first annual loss for the company, which was founded in 1970 and listed on the JSE in 1994.

In reaction, the share price declined as much as 5.68% before trimming losses to end 3.87% lower at R77 on the JSE, its lowest level since mid-May.

WBHO is one of a few construction companies that survived an industry-wide slump in SA, where big construction projects were few and far between over the past decade.

However, it is now going through a rough patch, mainly due to Probuild, its loss-making Australian subsidiary. WBHO has since pulled the plug on Probuild after writing down the goodwill of the unit — or a valuation of its brand.

WBHO said the losses attributable to the non-controlling interests were adjusted, resulting in an increase in the attributable loss from discontinued operations.

WBHO entered Australia in 2000, with the division accounting for about half of revenue. Like many of its peers, WBHO had looked offshore for growth amid an industry-wide slump that prompted the delisting of former giants, including Group Five and Esor.

But the Australian construction environment has become increasingly competitive, while the potential risk on megaprojects outweighed the margins on offer, it said.  

In February, WBHO said it had withdrawn all future funding other than that needed to honour existing obligations of its Australian operations.

The action forced WBHO Australia into administration and ended its relationship with the Australian construction industry after more than 20 years of being in that market.

The construction giant said putting that segment of the company into administration had allowed major subcontractors to cancel their contracts, which resulted in increased costs to contract subcontractors to clients in order to complete outstanding work.

With Michelle Gumede

mahlangua@businesslive.co.za