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Johannesburg - Stefanutti Stocks Holdings, a R2bn construction business, said it was seeking more contracts in Africa amid signs of increased margin pressure in South Africa.
The company, which on Wednesday posted a one quarter increase in share earnings, said competition for contracts in South Africa had intensified.
"We find markets in Africa are better than markets in South Africa in terms of margin growth. There's more risk which means there's more margin growth", said Stefanutti's CEO Willie Meyburgh.
However, the market took a dim view of Stefanutti's outlook with investors marking the share down nearly 4%. It was last trading at 1060c/share despite declaring a maiden interim dividend of 25c/share.
"We've been in Africa for many years, and we're seen as local companies, with local knowledge," Meyburgh told Fin24.com. "Most of our operating profits in Africa have double digit growth."
There was still work after the 2010 Fifa World Cup, but trading conditions were slow to come to the market, he said.
Tendering competition had increased, margins were being squeezed and moving into other countries in Africa - of which Rwanda and Libya were two possibilities - would increase the group's geographic diversity, he said.
Stefanutti wanted to derive as much as 30% of business from outside South Africa. Currently, about 19% of revenue is non-South African.
For the six months ended August, Stefanutti reported a 56% rise in revenue to R4bn. Total income for the period grew 6% to R153.6. Shares were 25% higher at 111.94c
"After the World Cup, we believe there's opportunities. We're positive government spend will happen, and from what we understand of R805bn state spend, approximately 30% of it will be spent on our sector," said Meyburgh.
He said the group was pricing in work on pipelines, roads, and the next phase of the Gauteng Freeway Improvement programme due start in 2012. "And it looks like Sanral have act together and can get funding for R23bn project," said Meyburgh.
- Fin24.com