Concor squeezed as spending falls

Posted On Tuesday, 17 February 2004 02:00 Published by Commercial Property News
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Construction group Concor reported a marginal drop in its half-year earnings and expects profits to be marginally down for the full year.

Cobus Bester Murray & Roberts Concor CEO John Willmott said the stronger rand had seen the mining industry cut back on new capital expenditure projects, which in turn cut into the group's earnings.

It was not just the mining sector that was hesitant to spend money on new projects, but all companies that derived their income in dollars were showing the same kind of concern, he said.

Willmott said it was anyone's guess when these companies would start spending with confidence again.

In its figures for the half-year to December, Concor pushed up revenue marginally to R753,5m from R733,9m in the comparable period.

Attributable earnings dropped to R9,1m from R9,6m and headline earnings a share declined to 68,4c from 72c.

While the outlook for the mining side was dim, the five interest rate reductions in the past year were driving growth in the construction of commercial properties. Besides the buoyant commercial sector, government's commitment to increase spending on infrastructure boded well for Concor, the CEO said.

Although Willmott had not seen government put out tenders for any large infrastructure, he pointed out that there was R1bn worth of road construction contracts in Eastern Cape.

But he did not think they would be easy to get as the slowdown in the construction industry meant competition for these jobs would be tough.

The group's facility management division successfully opened the scenic Chapmans Peak Drive in Cape Town on time during December.

Concor said that once consensus had been reached with all stakeholders on the positioning of permanent toll plazas, it would consider the job complete.

The group said its engineering division had a satisfactory result for the first six months, but its civils division experienced a difficult first half.

While "excellent" results were achieved on the N4 Platinum Toll Road project, overall results for its roads division were disappointing for the period.

Concor said it was now taking a more cautious view on crossborder work as these contracts had put a strain on its resources and profits for the past two years.

Interest-bearing debt increased over the past six months as result of capital expenditure of R41m. The group said this would be reduced by the end of the year and would be in line with the financial year to June 2003.

Concor said cash resources remained strong despite a reduction in advance payments on contracts nearing completion.

The construction company was confident that the current workload of R700m would improve towards the end of the year.

No interim divided was declared. Concor closed unchanged at R10,20 yesterday.

Last modified on Wednesday, 26 June 2013 17:59

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