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Johannesburg - JSE-listed road construction and rehabilitation company Raubex Group [JSE:RBX] on Monday reported a 37.1% decline in headline earnings per share to 92.9 cents per share for the six months ended August 2011 from 147.6c/share a year ago. Diluted Heps declined to 92.5c/share from 147.6c before.
Revenues were up 3.7% to R2.61bn, but operating profit was down 31.4% to R282m, as a result of the declining margins and extremely competitive conditions in the road construction industry. Cash flow from operations was down 34.8% to R263.3m.
An interim dividend of 25c per share was declared.
"We have delivered a satisfactory performance for the six-month period given the extremely difficult and highly competitive market in which the group is currently operating," said Francois Diedrechsen, financial and commercial director of Raubex Group.
"Our revenues have grown and we have maintained a stable order book supported by a good performance from the materials division. Although anticipated, the decrease in operating profit and cash flows was compounded by the bitumen supply problems and delays on certain provincial work."
Looking ahead, the group expects that in the short term trading conditions in the road construction industry will be challenging and the impact of margin pressure will continue to be felt during the remainder of the financial year and into 2013.
The group has adopted a cautious approach to tendering for new work at the prevailing low margins and has maintained a stable order book of R4.6bn compared with R4.7bn at the first half stage last year.
The improvement in mining activities will continue to benefit the material handling and screening operations of B&E International and SPH Kundalila over the short and medium term.
"Whilst the long-term outlook for the South African road construction remains positive, we will continue to monitor the effects of the tolling controversy on the group and on our clients closely whilst growing our portfolio of African projects," said Diedrechsen.
He added that government policy towards future toll roads in SA remains uncertain. This uncertainty and potential delays in the award of future toll concessions, including the N1/N2 Winelands project, could retard the industry's recovery.
With this in mind, the group continues to look for growth in other geographies and valuable experience is being gained around the tendering processes in the promising Indian roads sector.
"We are confident that the group will maintain a healthy financial position and stable order book of profitable work for the remainder of the year," Diedrechsen said.
Revenues were up 3.7% to R2.61bn, but operating profit was down 31.4% to R282m, as a result of the declining margins and extremely competitive conditions in the road construction industry. Cash flow from operations was down 34.8% to R263.3m.
An interim dividend of 25c per share was declared.
"We have delivered a satisfactory performance for the six-month period given the extremely difficult and highly competitive market in which the group is currently operating," said Francois Diedrechsen, financial and commercial director of Raubex Group.
"Our revenues have grown and we have maintained a stable order book supported by a good performance from the materials division. Although anticipated, the decrease in operating profit and cash flows was compounded by the bitumen supply problems and delays on certain provincial work."
Looking ahead, the group expects that in the short term trading conditions in the road construction industry will be challenging and the impact of margin pressure will continue to be felt during the remainder of the financial year and into 2013.
The group has adopted a cautious approach to tendering for new work at the prevailing low margins and has maintained a stable order book of R4.6bn compared with R4.7bn at the first half stage last year.
The improvement in mining activities will continue to benefit the material handling and screening operations of B&E International and SPH Kundalila over the short and medium term.
"Whilst the long-term outlook for the South African road construction remains positive, we will continue to monitor the effects of the tolling controversy on the group and on our clients closely whilst growing our portfolio of African projects," said Diedrechsen.
He added that government policy towards future toll roads in SA remains uncertain. This uncertainty and potential delays in the award of future toll concessions, including the N1/N2 Winelands project, could retard the industry's recovery.
With this in mind, the group continues to look for growth in other geographies and valuable experience is being gained around the tendering processes in the promising Indian roads sector.
"We are confident that the group will maintain a healthy financial position and stable order book of profitable work for the remainder of the year," Diedrechsen said.
