SA's WBHO in 4th FY profit fall
SA's biggest builder Wilson Bayly Holmes-Ovcon Ltd reported its fourth annual profit decline in five years.
|||Johannesburg - South Africa's biggest builder Wilson Bayly Holmes-Ovcon Ltd (WBHO) reported its fourth annual profit decline in five years, still smarting from the tapering off of big government projects after the 2010 soccer World Cup boom.
In response, WHBO has focused on the building industry at home, Australia and elsewhere in Africa, where demand for shopping malls, office blocks and residential properties has helped cushion the impact of slower public sector spending and cut backs from the mining industry.
“The local building market continues to deliver a number of major projects each year of which the group's building divisions are able to secure a significant share,” the company said in a results filing.
WBHO said its order book increased 65.3 percent to 36.1 billion rand ($2.7 billion), underpinned by a more than doubling in the value of projects won in Australia and about one-third rise in the domestic building and civil engineering book.
Shares in WBHO, little changed at 94.36 rand, have fallen 15 percent over the last five years, far lagging behind the JSE All-share index, whose gains have nearly doubled over the same period.
“I'd say a lot of pain has been taken but there's still a lot of risk in the forecast,” said Rhynhardt Roodt, a portfolio manager at Investec Asset Management. “It's going to be a very muted recovery because a lot firms are reliant on government spending and there isn't much work on that front.”
South Africa has delayed spending its nearly 1 trillion rand infrastructure investment package under its national development plan, a blueprint for growth drawn five years ago, is struggles with job losses that has hit tax revenues and little headroom to take on more debt.
WBHO reported 13.5 percent fall to 11.06 rand in headline earnings per share (EPS) from continuing operations in the year to the end of June. Headline EPS is the main profit measure in South Africa that strips out certain one-off items.
Reuters