12 November 2008
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Johannesburg — SOME listed construction groups in SA have continued to report robust earnings growth - thanks in large measure to the government's spend in a bid to deal with infrastructure backlogs.
Raubex, an investment company with subsidiaries in road construction and related industries, is one of these groups. It made five acquisitions in the past 12 months, and listed in March last year.
The acquisitions, and its full order book, are the principal reasons for a 131,7% increase in revenue to R2,23bn in the six months to August .
Roads authorities generate 40% of revenue for the company, while private companies and parastatals account for the remainder. Importantly, its order book increased to R4,9bn from R2,3bn at the same time last year.
Management said margins were under pressure, because of the increased size of the company, but they nevertheless forecast a strong second-half performance.
It is important to note the government has not scrapped any capital expenditure plans over the global credit crisis.
The backlog in road construction in SA remains a critical issue - one that is likely to keep road builders busy for years to come.
Another company that has grown well, also through acquisitions, is Stefanutti Stocks. It more than doubled revenue to R2,75bn in the six months to August, and has digested the acquisition of the Stocks construction company.
Stefanutti's management said the order book was worth R6,6bn, and that there were opportunities in the Gulf and southern Africa.
The list of companies on the JSE with strong short-term earnings prospects is not that long, but both of these companies have their long-term building blocks in place.
The Bottom Line is Edited By Edward West
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