Raubex Order Book Reaches R39bn Amid Infrastructure Push

Raubex, a South African construction company, has seen a significant increase in its order book, which now stands at R39bn, a 24% rise since the end of the previous year. This growth is attributed to renewed tender activity and opportunities in various sectors, including rail, renewable energy, and water infrastructure. The company's project pipeline has strengthened, positioning it for future growth.

The increase in Raubex's order book is also linked to the recovery in Sanral's road construction contract awards. Between July and October, four projects worth a combined R1.54bn were awarded. Raubex is executing projects across various sectors, including battery storage, solar PV, wind energy, and water infrastructure. Additionally, the company has been named preferred bidder for the Limpopo border post project.

Raubex reported an 11.8% increase in revenue to R12.12bn for the six months to end-August, while headline earnings per share rose 4.4% to 254.3c. However, operating profit rose only 2.5% to R618m, lagging revenue growth due to margin pressure across several divisions. The company's shares fell 2.72% to R42.97 on Monday.

The materials handling and mining division was a major drag on Raubex's performance, swinging from an operating profit to a loss of R111.1m despite revenue growth of 27%. The weakness was largely driven by the underperformance of Bauba Resources' mining operations and higher input costs linked to the conflict in the Middle East.

Raubex CEO Felicia Msiza stated that the decision to sell its full stake in Bauba followed a strategic review, with the group looking to sharpen its focus on core infrastructure operations and free up capital to pursue growth opportunities. Discussions are progressing, though there is no certainty that a transaction will be concluded.

The construction materials division's revenue rose almost a quarter, but weaker aggregates performance and a slower-than-expected recovery in bentonite demand weighed on operating profit. In its roads and earthworks division, the group reported revenue growth of almost 20%, while operating profit remained largely flat.

Raubex's Western Australian operations provided an earnings boost, swinging from an operating loss to an operating profit of R145.1m despite largely flat revenue. The group's overall cash generation more than doubled, while its interim dividend rose 8.6% to 88c a share. Msiza expressed positivity about the medium- to long-term prospects, citing opportunities across its divisions and its secured order book as support for future growth.

Key points

• Raubex's order book reaches R39bn, a 24% increase since year-end.
• The company's revenue rises 11.8% to R12.12bn for the six months to end-August.
• Raubex's Western Australian operations swing to an operating profit of R145.1m.