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Despite the slowdown in the construction sector, Wilson Bayly Holmes-Ovcon (WBHO) has seen a growth in revenue and profit. The company’s interim results showed 17.3% growth in revenue, reaching R18.1 billion. Operating profit increased by 8.1% to R510 million.

WBHO Louwtjie NelThe bulk of this growth came from the company’s Australian operations, while the local and UK-based WBHO businesses declined. The Australian operations saw a 28.7% increase in revenue to R11.1 billion, and a 33.6% increase in revenue from roads and earthworks. South African building and engineering income dropped by almost 10%, while the small construction materials division saw a 29.6% decrease in revenue.

However, the Australian revenue however came at a much smaller margin (1.3%). Local operations are still responsible for generating the largest share of operating profit (R271 million), but the UK business, the Byrne Group, ran at an operating loss.

WBHO holds a 40% share in the Byrne Group, which earned R1.1-billion revenue for the six months ending December 31, but suffered a R68-million operating loss. According to the company, the volume of work was insufficient to cover the Byrne Group’s overhead costs, and additional restructuring and retrenchment costs exacerbated the situation.

“We have had a fairly flat year in terms of operating profit, but I think our fortunes and those of the sector in general are beginning to pick up. We are probably at the bottom of the curve, of what has been a prolonged difficult period for construction in South Africa. But we are beginning to climb out of it and should be able to maintain a similar dividend for 12 to 18 months,” WBHO CEO Louwtjie Nel said.

Nel added that he was optimistic that President Cyril Ramaphosa’s new Cabinet would get infrastructure and State Owned Enterprise project spending back on track, but that this would only happen gradually given how many obligations the government had to deal with as it implemented its new leadership. “Government has lots of obligations. We won’t see any big projects soon. However, an increase in fixed investment arising from renewed business and investor confidence, together with added public spending should the economy improve, could only serve to benefit the construction industry in the long run.”

Image credit: http://www.wbho.co.za/directors-test/

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