Raubex expansion into Australian market imminent
A GEOGRAPHICAL expansion by listed road construction and rehabilitation group Raubex into the Australian market is imminent. The expansion was prompted by a lack of growth opportunities in South Africa and Africa.
Raubex chief executive Rudolf Fourie confirmed yesterday that they were in the process of concluding an acquisition of a small-tier civil construction company in Perth to enter that market.
“The idea is that we want to use it as a platform and grow our presence there and grow this company as well from the capacity we have in South Africa at the moment,” he said.
“We will hopefully be able to make an announcement in the second week of January (about the transaction).”
Fourie said Raubex was battling to find growth opportunities in South Africa or Africa and, apart from its first venture into Australia on the west coast, would also like to get access to the east coast.
“Typically we would like to get about 30 percent of our revenues offshore and are giving ourselves three years to achieve that,” he said.
Diversifying
Raubex has also been diversifying its operations and entered the commercial buildings renovation market recently after its earlier entry into the independent power producer market.
Fourie denied this was a diversification away from its traditional core road building and maintenance business, stressing the group still had the same road building and maintenance capacity.
He said Raubex did not see growth in the general construction market in South Africa and it was not expanding into the Australian market because of the SA National Roads Agency (Sanral).
However, Fourie admitted that there were issues in the road building and maintenance market and Raubex was not seeing the spending it would like to see in that market despite Sanral having a R15 billion budget.
“Sanral is 17 percent of our revenue, so they are obviously an important client. But there is a major delay in Sanral contracts going out to tender at this stage and we don’t think they are going to spend their budget this year. To protect ourselves and ensure growth and get a revenue stream into the group, we are looking at different sectors,” he said.
Raubex yesterday reported a 2 percent decline in revenue to R4.67bn in the six months to August from R4.76bn in the previous corresponding period.
Operating profit dropped 6.1 percent to R370.6 million from R394.7m, with the group operating margin deteriorating to 7.9 percent from 8.3 percent. Headline earnings a share was marginally higher at 131.1 cents compared to 130.6c.
Cash flow from operations slumped by 14.2 percent to R464.3m from R541.4m. A dividend a share of 45c was maintained.
The order book dropped by 8 percent to R7.52bn from R8.2bn, with almost 29 percent of the order book representing contracts outside South Africa in the rest of Africa.
The order book for Sanral slumped by almost 27 percent to R1.46bn from R1.99bn, with the provincial order book dropping by 31.9 percent and the municipal order book by 29.8 percent.
Fourie said the group had entered the market for the renovation of commercial buildings through the establishment of Raubex Renovo to support the growth in the infrastructure division.
This business secured an order book of R322m during the period, which included the renovation of the Preller Mall in Bloemfontein and the construction of an Onomo Hotel in Douala in Cameroon.
Raubex traded flat at R19.50 on the JSE yesterday.