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Johannesburg - Construction group Wilson Bayly Holmes-Ovcon (WBHO) surprised the market on Monday by delivering annual earnings which exceeded its expectations.
After warning in August that it anticipated both headline earnings per share (Heps) and earnings per share (Eps) for the year to end-June 2009 to be 15% to 25% higher than in 2008, it reported growth of 27% in Heps (to 1 610.8c) and 25% in Eps (to 1 624c) respectively.
"These are good results - if anything, they surprised the market," said Imara SP Reid analyst Stephen Meintjes, echoing the comments of other analysts. "This is our preferred construction stock and it did not disappoint at all," said Vega asset manager and director Francois du Plessis.
The group's revenue for the year gained 37% to R14.8bn, while net profit increased by 26% to R963m. The operating margin declined from 8.4% to 7.1%, which WBHO said indicates "the tightening of the economic conditions in the construction market both locally and globally".
Order book down, optimism high
Despite a lower order book for the next year (down 16.39% to R15.3bn), chairperson Mike Wylie said the group is well positioned to take advantage of government's infrastructural spend.
Wylie added WBHO will look out for opportunities outside the country, particularly in Africa and the United Arab Emirates.
Despite a slowdown of business activity in Middle Eastern countries due to the economic crisis - with a multitude of construction projects being put on hold - Du Plessis said the outlook for the region is improving.
"Remember, the oil price has almost doubled since its February 2009 lows. Many oil-producing countries were in a tight spot when the oil price was trading at $40 a barrel; the future is looking much brighter at $70 a barrel and projects are moving again," said Du Plessis.
A final dividend of 200 cents per share was declared which, together with a 100c/share interim dividend, resulted in a 24% increase in the group's total dividend.
By late-morning trade on Monday, WBHO stocks were up 2.37% to R117.94c/share. At the time, the JSE's All-share index was up 0.97%.
- Fin24.com