Raubex warns of 20% drop in FY earnings

13 February 2019

Infrastructure development
and construction materials
group Raubex has
warned that its earnings for the financial year
ended February 2019, will fall by at least 20%, owing to continued weak trading
conditions in the South African construction industry,
particularly in the road construction sector.

The JSE-listed firm said on Tuesday that its
earnings a share would fall by at least 46.7 a share, from 233.5c a share in
2017, and that its headline earnings a share would decline by 45.7c, from 228.6c
in the previous corresponding period.

The weak trading conditions during the second half
of the financial year had
negatively impacted on Raubex subsidiaries, both
in the road construction operations and in
the road rehabilitation and maintenance operations, which include
the supply of asphalt and bitumen to the

The subsidiaries affected by the low level of
demand had been rightsized and capacity had been reduced, the company noted.

Raubex’s earnings have been
supported by the materials division, which contributed 54.5% of its total
operating profit in 2017/18. This division experienced stable operating
conditions during the current financial year,
buoyed by its diversified operations,
including material handling services to the mining sector
and commercial aggregate supply.

The infrastructure division
has also experienced favourable conditions in the affordable housing sector
throughout the financial year. Raubex said that the
division was well positioned to benefit from the roll out of work related to
the Renewable Energy Independent Power Producer
Procurement Programme (REIPPPP) in which a number of contracts were being

Three REIPPPP contracts, to the total value of
R621-million, had been secured during the year and work started on these projects during
the second half of the financial year.

Notwithstanding the challenging conditions being faced by the South African construction industry, Raubex said that it had maintained a strong balance sheet throughout the year and that it was well positioned to participate in any future opportunities in the sector should conditions begin to improve.

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