Construction World October 2016

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CONSTRUCTION WORLD OCTOBER 2016
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COMMENT
EDITOR & DEPUTY PUBLISHER
Wilhelm du Plessis
ADVERTISING MANAGER
Erna Oosthuizen
LAYOUT & DESIGN
Lesley Testa
CIRCULATION
Karen Smith
TOTAL CIRCULATION:
(Second Quarter ’16)
4 766
PUBLISHER
Karen Grant
PUBLISHED MONTHLY BY
Crown Publications cc
P O Box 140
BEDFORDVIEW, 2008
Tel: 27 11-622-4770 • Fax: 27 11-615-6108
The views expressed in this publication are not necessarily those of the editor or the publisher.
PRINTED BY
Tandym Cape
@ConstWorldSA
To start with the almost unthinkable: M&R. After
years of stagnation in the infrastructure and
building markets, the company has announced
that its focus will now be on global underground
mining, oil and gas and power and water. It is
not only selling its infrastructure and building
businesses, but will also dispose of its steel and
engineering services.
The reason for this dramatic change in
focus to what the M&R CEO, Henry Laas calls a
‘new strategic future’, is easy to identify. Since
the government’s massive spend on the 2010
Soccer World Cup, spending on huge infra-
structure projects have all but dried up. Laas
points out that M&R is not exiting the country,
but exiting a sector.
M&R’s announcement comes after the
company announced that its diluted headline
earnings per share fell by 10% for the year
The last month has been an interesting
time for the South African construction
industry with the announcement by
Murray & Roberts (M&R) that it is exiting
the infrastructure and building markets in
South Africa and the vastly mixed annual
results from three of SA’s listed companies
(Aveng, Group Five and WBHO).
to June. Further complications have been
the paying by 15 construction companies
(R1,5-billion collectively) for alleged collusion in
infrastructure for theWorld Cup, empowerment
pressures and recurring violent strikes.
Critical to core stability
Three other listed construction companies
recently announced its latest results: Aveng,
Group Five and WBHO.
Aveng’s (SA’s largest construction company
by turnover) results show that only 37% its
pipeline projects for the next two years is made
up of domestic building and engineering work.
This is down from 56% in 2015. Its revenue also
took a plunge: from R578-million in June 2015
to R299-million in June 2016.
It is increasingly relying of work outside
South Africa: 60% of its work now happens in
the Australia and Southeast Asia region (up from
40% last year).
Group Five, by contrast, doubled its oper-
ating profit – albeit entirely from its toll road
concessions in Eastern Europe.
Its CEO, Eric Vemer says that only govern-
ment spend on infrastructure projects can lead
to a recovery of the group’s heavy construction
in South Africa.
Even thoughWBHO’s results show a healthy
jump in profitability, CEO Louwtjie Nel is quick to
point out that this is not because of improving
conditions in the South African market. He
maintains that this is largely due to the fact that
the company now has a bigger share of the
market. In addition, WBHO’s building divisions
in SA and Australia offset lower activity levels in
especially mining which pushed up the headline
earnings per share.
Wilhelm du Plessis
Editor