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Despite a severely depressed South African economy, the country’s largest construction firm Wilson Bayly Holmes (WBHO) has reported an increase of more than R2 billion in its group revenue, which reached R22.9 billion for the six months to the end of December 2019. Its operating profit rocketed to R264 million from R2 million (a number depressed by a provision for a large project in Australia) at the end of 2018. Headline earnings per share rose 183% to 411c.
After not declaring an interim dividend in the previous year, the company will now pay 80c a share. WBHO’s share price has lost 25% of its value so far this year, and fell another 2% by late afternoon on Tuesday.
WBHO says South Africa construction is seeing its worst slump in decades, due mostly to the weak government infrastructure spending and low business confidence. Still, revenue from South Africa increased by 6.9%, while revenue from the rest of Africa rose by 7.4%.
WBHO has benefited from fewer competitors - with many of them (including Group Five, Basil Read and Esor) either in bankruptcy protection or being liquidated. WBHO also reports that there was the “recent emergence of increased public spending from the more stable SOEs”.
Sentiment in Australia remains strong with sufficient work available across both building and infrastructure markets, WBHO says. “Following the poor results achieved over recent years, identifying key risks at procurement stage as well as improved project execution remain in sharp focus within the Australian operations.” WBHO also has a business in the UK, and says that the London construction market is showing signs of improved activity.
