Raubex boasts record order book

• Group has recovered strongly in the second half of its year to end-February, and is eyeing growth and acquisitions

Construction and materials group Raubex, one of the few JSE-listed survivors of SA’s weak building market, says the infrastructure drive and high commodity prices have helped deliver a record order book as well as three to five years of future work for the first time.

Construction and materials group Raubex, one of the few JSE-listed survivors of SA’s recently weak building market, says the state’s infrastructure drive and high commodity prices have helped deliver a record order book as well as three to five years of future work for the first time.

Tendering activity appears to be at a record high, CEO Rudolf Fourie says, with the monetary value of work in the market the best he has seen in his three decades in the industry.

This comes amid signs that the construction industry is recovering from years of decline due a dearth of infrastructure spending from the state after the 2010 World Cup.

At the moment, however, there was plenty of work in SA to keep the group occupied, said Fourie, with Raubex expecting to do less work in the rest of Africa in the short term — usually 30% of its order book — given the disruptive effects of the pandemic.

Raubex, which was founded in 1974 and listed on the JSE just before the global financial crisis in 2007, said on Monday its secured order book has risen more than two-thirds to R17.1bn in the group’s year to endFebruary, with more expected to follow.

Unsecured contract opportunities that have been tendered and are still pending adjudication are “significant”, the group said. It was also waiting on news on large materials handling contracts in the mining sector, where activity has been boosted by high commodity prices.

The group said it is finding further encouragement from President Cyril Ramaphosa’s announcement in October 2020 of SA’s economic reconstruction and recovery plan, which is aiming for an aggressive infrastructure-led economic recovery from the pandemic.

Raubex benefits from the rollout of road infrastructure projects through the SA National Roads Agency (Sanral), which oversees the national road network. Through its road and earthworks division, Raubex builds new roads and highways, and upgrades and rehabilitates existing roads, whose order book more than doubled to R11bn.

The group said it received a number of new contracts in its second half, notably about R6bn from Sanral.

Revenue rose 1.3% to R8.85bn in the group’s year to end-February, having fallen 10.5% in the group’s first half, when construction in SA was not designated an essential service and activity stopped.

Headline earnings, a widely used profit measure in SA that excludes one-off items, almost halved to R148.1m to end-February, but is an improvement on its R48.2m loss for its half-year to end-August.

Raubex’s materials division, which includes quarrying and materials handling, fared particularly well. This division generated only a quarter of revenue, but provided 82.7% of the group’s R364m in operating profit.

“We were quite surprised for the strong demand for aggregate after Covid-19 restrictions eased, and it is still ongoing,” said Fourie. This appeared to be due to activity from smaller operators, said Fourie, and there could be even more upside for this business as large construction projects got under way.

Raubex, which also cut back on spending, including capital expenditure, saw its net cash almost quadruple to R1.1bn. Fourie said the group would be conservative with its cash, due to a need for working capital as projects get under way, but would be considering small acquisitions.

The group declared a final dividend of 29c a share, a payout of about R52.7m, having not declared a final dividend in its 2020 year.

Overall, the group’s performance was ahead of expectations, said head of investment research at FNB Wealth and Investments Chantal Marx, who said the outlook for the sector had brightened.

There was an improvement in investment locally, albeit delayed in certain areas, she said, while the mining capital expenditure cycle should also be supportive.

“Record high commodity prices could spur renewed investment in capacity, which will also be good for many of the SA players,” said Marx.

The group’s shares were up 5.26% to R28.00.