Maravi

‘Road construction profit margins under pressure’

‘Road construction profit margins under pressure’
By Nchima Nchito Jr
Thu 12 Nov. 2009, 04:00 CAT

PROFIT margins in the road construction industry are under pressure, Raubex Construction has revealed. Raubex is a construction company with operations across Southern Africa.

According to engineering news, Raubex financial and commercial director Francois Diedrechsen attributed the lower profit margins in the construction industry to a sizeable increase in the number of companies vying for especially smaller contracts.

“This happens every few years. It is just history repeating itself. Usually, within a few years these companies are gone,” he said.

Recent tender results indicated that in order to secure new work locally, current operating margins in the company's Roadmac and Raubex Construction divisions would continue to be adjusted to account for the increased competition, particularly in the light road surfacing sector.

The company stated that in Zambia, conditions were more challenging due to exceptionally high rainfall impacting on the re-gravel contracts while Rehabilitation contracts with a high content of cement and bitumen were also affected negatively by supply issues. It further states that the strength of the South African rand against the Zambian kwacha resulted in increased input costs having a negative effect on operating margins.

Diedrechsen, however, said the company delivered a “satisfactory performance”, despite challenging conditions in the first half of the year.

“Our international expansion is progressing well following the successful establishment of our footprint in Namibia, and this has already led to further work being awarded to Raubex in that country. In addition, a number of new projects were secured locally following the interim period,” said Diedrechsen.

“We expect the performance of the second half of the year to improve, and remain confident that our strong financial and operational position will allow the group to maintain its performance in the medium term.”

Labels: CONSTRUCTION, RAUBEX CONTRACTORS, ROADS

posted by MrK @ 8:13 AM