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South African construction firm Raubex eyes international market

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South African construction heavyweight Raubex will be seeking to establish its foothold internationally to boost revenue in the wake of weak domestic growth, the company’s CEO Rudolph Fourie has said.

The move has been attributed to a drop in revenue as shown in its interim results report for the six months ended August 31 released Monday.

Revenue was down 2% to R4.67bn, from R4.76bn reported in a similar period last year. Operating profit was down 6.1% to R379.6m, from R394.7m reported last year. Net profit was down 3.3% to R254.9m, from R263.3m.

Earnings per share, however, were up 1% to 134c, and headline earnings per share were up 0.4% to 131.1c. This improvement is a result of a decrease in earnings attributable to non-controlling interests, the group explained in the report. An interim dividend of 45c was declared.

Capital expenditure increased to R253.2m compared to R234.9m reported previously.

Fourie disclosed that part of their growth plan will also include acquisitions for their materials division which accounts for nearly half of the group’s profits.

Read:Turbulent times for South Africa’s construction industry

“The South African construction environment is currently not conducive to growth and we will continue to explore opportunities to supplement our revenue streams internationally,” he said.

And one of the countries Raubex is targeting is Australia.The strategy will involve acquisition of smaller companies with growth prospects rather than larger companies more established business with associated risks.

“Back home, we will be looking for acquisition opportunities in the commercial aggregates sector. We will be seeking to expand our materials division which contributed strongly to the group’s overall operating profit,” said Fourie.

About 46.3% of the group’s operating profit is generated from materials supply and mining-related services.

Hard economic times in South Africa has forced construction companies to restructure in a bid to respond to the prevailing situation.Companies are increasingly looking abroad for opportunities.

Afrimat, the listed open-pit mining company and a supplier of industrial minerals, commodities and construction materials says it is looking into the possibility of expanding into other continents.

1USD is equivalent to 14.10 South African Rand

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