Record order book maintained
R11.6BN: CONSTRUCTION GROUP PRODUCES STRONG RESULTS FOR 2021-22 FINANCIAL YEAR
→ Raubex expects further significant project awards.
JSE-listed construction group Raubex maintained its R17.1-billion record order book in the year to end-February, and is awaiting the adjudication of tenders valued at R30 billion it has submitted for South African National Roads Agency (Sanral) projects.
The group is also anticipating getting its fair share of work from the renewable energy sector.
Raubex chief executive Rudolf Fourie said the group maintaining its order book of R17.1 billion was a highlight of its latest financial year because it is currently working R50 million a day off its order book.
“The fact that we have maintained that record order book for the past 12 months is quite encouraging and Sanral has not yet awarded any of the big contracts to date,” he said. “The good news is we have got enough work for this year and the year beyond that.”
Of the Sanral tenders submitted, the group is in the running for projects valued at between R8 billion and R10 billion.
However, the term of office of Sanral’s board was extended to August and Raubex is not getting any clarity on expected awards.
He said Sanral projects valued at less than R300 million do not go to the tender board and are awarded by a committee.
“Those projects have been awarded and that is how we kept our order book. We were awarded four projects between R200 million and R300 million last month.
“It’s not that nothing is happening. There is uncertainty on the mega projects of over R1 billion,” he said.
Sanral told Moneyweb in March there has been a significant delay in the adjudication and awarding of its tenders, resulting in 258 projects collectively valued at R31.7 billion being rolled over to the current 2021-22 annual procurement plan.
Sanral chief financial officer Inge Mulder confirmed at the time the 2021-22 plan included the commencement of the procurement process for a further 312 projects collectively valued at R30 billion.
Fourie said there have been delays with the renewable energy programme but the commercial close of the 25 projects in the independent power producer (IPP) bid window 5 is now expected in September.
Commercial close on bid window 5, which comprises 12 onshore wind and 13 solar photovoltaic projects selected totalling 2 600 megawatts, was originally estimated to be in February.
Fourie said IPP bid window 6 is scheduled to open this year and will be as big as IPP bid window 5, which will ensure continuity in the renewable energy market.
“It will happen, the only question is when,” said Fourie.
“We personally don’t foresee a big [amount] of work in this financial year but hopefully by next year it will start falling in place.
“If they award windows 5 and 6, which I think they will, it is material to the group size-wise and will change our whole infrastructure division,” he said.
Fourie said Raubex’s three divisions are currently executing the group’s order book profitably and he is unconcerned about the capacity of the group to profitably execute projects. It is probably running at about 80% of capacity and if all the tendered work is awarded will have to make a plan.
“In the construction space, there are a lot of smaller listed construction companies that do not fulfil Sanral technical criteria that we will use to help our capacity, but we are not there yet.
“If some of the work gets awarded, we should be fine. The delay suits us because we obviously have got work at the moment but if everything gets awarded tomorrow, yes there will be capacity issues.
“The problem is we don’t know when it will get awarded. If it gets awarded in 12 months’ time, we are fine because then we have 50% capacity available,” he said.
Raubex reported a 30.9% rise in revenue to R11.58 billion in the year to end-February, from R8.85 billion in the previous year.
Operating profit increased 159.4% to R945.3 million from R364.5 million, with the group operating margin improving to 8.2%.
Headline earnings per share increased 263.1% to 297.4 cents from 81.9 cents.
A record final dividend of 54 cents per share was declared, increasing the dividend for the full year to 101 cents per share.
Fourie said the higher level of government spending on infrastructure contributed to the group’s growth and is set to sustain its order book going forward.
“Operationally, the continued focus on the highest quality execution resulted in the successful completion of the second milestone on our flagship Beitbridge border post project and we are on track to reach completion in line with expectations,” he said.
The R2.5-billion contract for upgrading the Beitbridge border post in Zimbabwe is Raubex’s single biggest contract to date.