Monday, 16 March 2009 02:00

Eskom awards R1.6bn contract to Alstom

France's Alstom announced that it has signed a contract worth about R1.6bn with Eskom to to retrofit the low-pressure turbines at Koeberg nuclear power station

Friday, 13 March 2009 02:00

O-Line turns in strong figures

O-Line Holdings reported a strong performance for its interim period, boosted by a boom in investment in infrastructure projects in SA and Africa.

Warren Buffet once said: “You only find out who has been swimming naked once the tide goes out”, implying that tough times expose those people/companies that have been a bit too risqué during the good times

Tuesday, 13 January 2009 02:00

Eskom halts supply to big developments

Eskom said last year it would not provide electricity to new developments requiring more than 100kVA power because of SA’s low reserve margins.

Record order books are expected to help construction stocks maintain decent earnings growth in the new year, but beyond that the future is uncertain as the global credit crisis eats up future work opportunities.

Construction IndustrySouth Africa‘s big-four construction firms boast a combined R120 billion order book, thanks to the phenomenal sector growth in the lead-up to the 2010 Fifa World Cup, as well as developments in other markets.

While these order books will certainly build up construction groups‘ coffers, the global economic slowdown – which is expected to deepen next year – may open floodgates of project cancellations and delays.

So, while “the outlook for next year is pretty decent, future work opportunities have been reduced”, says one analyst, who declined to be named.

Already Murray & Roberts, the country‘s largest construction firm, has had to adjust its books after its Trump Tower joint venture in Dubai was suspended, wiping R3,2-billion off its R61-billion order book, although the firm landed a R6-billion contract to build a terminal at Dubai International Airport shortly after this.

Underscoring predictions of the tough trading conditions ahead are union claims that Murray & Roberts is planning to axe workers as the rough trading environment restricts its ability to expand.

Group Five disclosed in an interview that there “had been a small and immaterial reduction” in the number of projects in the African mining sector and that “one small housing project” for a mining firm had been cancelled.

Eskom has also terminated the procurement processes for the proposed multi-billion-rand Nuclear-1 power plant project.

Aveng and Murray & Roberts were in two separate consortiums bidding to build the power plant, with Aveng saying the termination was “understandable” and that it had confidence in the continued infrastructure roll-out in the markets in which it operated.

“I don‘t think we have seen the last of these project cancellations and delays,” the construction analyst said.

Project flow from the mining sector is expected to worsen in the new year, with Group Five having already seen a slowdown in African copper mining.

Mining companies across the world are cutting back on production as weakening commodity prices bite into earnings, with Anglo American and Anglo Platinum expected to slash capital expenditure in half when they announce revised spending plans next week.

Together with public sector spending, construction companies also based their original rosy 2009 outlooks on “continuing demand for commodities”, which was expected to spur expansions in the mining sector, although many miners are now cutting back.

Aveng has downplayed the impact of the global crisis, saying its project pipeline remained strong, but it is “taking longer for clients to finalise projects”.

For the next few years the sector is banking on South Africa‘s multibillion-rand infrastructure spending, but if the national treasury is unable to raise funds offshore to counter shrinking foreign capital inflows it may need to reprioritise its spending plans.

South Africa is spending R600-billion over the next three years to upgrade and build new roads, power generation and transmission, rail, ports, pipelines, hospitals, prisons and schools.

Another analyst said the fact that Eskom – which accounts for the bulk of the infrastructure package – had to shelve its nuclear project suggested that even governments, albeit to a lesser extent, were feeling the pinch of tighter credit lending.

“Those with no exposure to public sector spending are in for a rough time,” the analyst said.

But all big-four construction companies are comprehensively exposed to this multi-billion-rand package, with Murray & Roberts saying it will drive annual growth of 15% to 25% through to at least 2014.

 

Nersa says it has excluded the construction of stadiums for the 2010 World Cup and Gautrain from penalties that are part of the power conservation programme.

Wednesday, 10 December 2008 02:00

Stefanutti wins Kusile contract

Stefanutti Stocks said that a consortium of JSE-listed companies it was leading had won a civil works contract for Eskom’s Kusile power station in Mpumalanga.

South African construction firm Aveng is disappointed by power utility Eskom's decision to abandon its nuclear project, its chief said.

Freight infrasturcture has not kept pace with development of new mines in rural areas.

Tuesday, 03 June 2008 02:00

Rosy revenue outlook for bigger Buildmax

BUILDMAX, a supplier to the mining and construction industries, has set itself the ambitious targets of raising turnover 15-fold in the present financial year. As if to underline this, its share climbed more than 6% yesterday.

Construction IndustryThe R111,5m revenue the group made in the year to February is minuscule compared with the R1,7bn it expects to make this year.

However, the recent results do not take into account two major acquisitions the group made between December and March, which are expected to enhance an enlarged Buildmax’s earnings.

The group spent about R1,5bn to acquire equipment and services supplier Buildco and Diesel Power Open Cast Mining, strengthening its position in the both the mining (especially coal mining) and the construction sectors.

These are both high-growth sectors, given the increased demand for coal by Eskom, as well as billions of rands being spent by both the government and private sector on infrastructure projects.

The group has also projected an after tax profit of just above R200m, making it a competitor in its sector.

CEO Paul de Klerk said the group’s equipment and services division would do even better than expected because it was already dealing with huge demand.

The prospects look rosy.

 

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