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Annual results out from Raubex; strong H2

With the high Covid risk profile in Africa, and enough available work in South Africa, the company will currently focus primarily on the local market – CEO Rudolf Fourie.

 SIMON BROWN: I’m chatting with Raubex CEO Rudolf Fourie. They had results out for year-end February. Revenue was up 1.3%, headline earnings per share down 49.4, cash up strongly, up 68%, the order book up strongly, up 68.9% to R17 billion. And a 29 cent dividend.

Read: Raubex grows order book to record R17.1bn

Rudolf, good morning. I appreciate the time. if I pull apart H1 and H2, in H1 for your financial year, you actually did a negative 26.6 Heps, which means that actually, H2 came in around 110 cents in total, if my maths is right. Actually a really strong second half. Are you able to operate normally? Obviously, under the first half of the year with lockdown [levels] 5 and 4 you couldn’t. Are you able to pretty much operate at sort of pre-pandemic levels?

Rudolf FOURIE: Good morning, Simon. As you correctly said, it was very much a year of two halves, the first half impacted very heavily by Covid. We couldn’t work. We were locked down for three months, and then we bounced back quite nicely. Yet a strong year in the second half. All the operations were kind of back to normal and what was quite pleasing is we saw an increase in some of our operations, like our commercial quantities – an increase in off-take there, which came in with a very strong second half. 

Now hopefully in the next financial year, we can leverage off that because we’ve got a strong order book now, so we’ve got work. Just remember, we’ve come off a very low base as far as work was concerned, but hopefully, it now looks like we could be set, because on top of that there is a lot of tender activity in the construction sector in South Africa at the moment, which is very encouraging.

SIMON BROWN: Those tenders? I’m thinking back, probably just as you started as CEO back around 2010 or so, just post the World Cup and the like, I remember back then everybody was suddenly a builder, and there were all the bakkie brigades and the like. Are you seeing increased competition in tenders as well? Or is it still really just sort of the big players?

Rudolf FOURIE: There is a strong private sector in the construction companies, medium size. It’s quite competitive in South Africa at the moment still. So there is still healthy competition. Unfortunately, a lot of the big players, as you know, have been wiped out in the last few years due to lack of work and some problem contracts. But I believe we’ve got enough capacity and skillsets in South Africa to do this work. So the pricing is still under pressure because it has come off such a low base. People need to get busy for prices to improve, but at least we are starting to work again.

SIMON BROWN: You actually mentioned the context of my next question to you – skills, capacity, and availability. You believe more broadly for the economy, but particularly for Raubex, you’ve managed during the lean period to hang on to skills and retain capacity for the increased orders as they’re coming in.

Rudolf FOURIE: Yes. Look, we were running at only 60% capacity doing this work because we knew this work was coming and there was quite a big holding cost to keep this capacity within the group. So we did right-size, but we only right-sized to retain quite a lot of capacity. I think we are positioned well to manage and use that capacity. Even in the South African market, there is still quite some capacity left. We’ve got a lot of engineers sitting in coffee shops. We need to get them back on the road again.

SIMON BROWN: Well, as long as they’re in a coffee shop in South Africa, we can phone them and get them back in. 

Rudolf FOURIE: Well, unfortunately, half of them are sitting in coffee shops in New Zealand and Australia as well. But I think we could get them back as well.

SIMON BROWN: Perhaps we could. Western Australia is doing nicely for you, but you are being a little cautious on the rest of Africa. I suppose if there’s work in South Africa, and Australia is going nicely, you’ve run into some challenges there. You’re doing the Beitbridge border, but that you’ve kind of made almost a South African contract. And the rest of the continent? There’s work there, but perhaps not as profitable or necessarily as logistically easy.

Rudolf FOURIE: You see, the problem is Covid on its own has made construction in Africa very difficult because of border issues and crossing borders. That’s work that’s quite traumatic to do during Covid because, for example in Cameroon, we were locked in Cameroon for six months. We couldn’t get anybody in or out. So the Covid risk profile in Africa, which is already at high risk as far as funding and logistics go, is quite high, and we’re just deciding there’s enough work in South Africa to focus on the South African market. So we will continue with the neighbouring countries where we’ve got offices and infrastructure, but in West Africa and northern Africa we are not going to focus on at this stage.

SIMON BROWN: We’ll leave that there. That was Rudolf Fourie, CEO of Raubex , I appreciate your early morning, sir.

Listen to Tuesday’s full MoneywebNOW podcast here.



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