the 06/03/2008

S African construction company profit

Road Construction Construction and small plant hire company Erbacon, which listed on the AltX in December, said yesterday the construction boom had lifted its earnings for the year to February. Erbacon (ERB) revenue for the year climbed 88% to R225m, and CE Dave Erskine said he expected it to top R750m for this financial year if activity in the industry remained as robust. Attributable profit grew 154% to R32m, while headline earnings per share increased to 33,3c, up 170% on the previous year. The biggest contributor to the company's revenues was the civil construction division, which brought in 70% of turnover. The division is involved mainly in nonresidential building operations, such as concrete structures and buildings, bridge rehabilitation, pipeline construction, township services and bulk earthworks and road works. Since its listing, the company has grown through its strategy of acquisitions and expansion beyond KwaZulu-Natal, which has helped its forward order book grow to about R500m. Erskine said while most activities were concentrated in KwaZulu-Natal, construction projects had been started in Eastern Cape and Mpumalanga. In February Erbacon bought KwaZulu-Natal general contracting company Armstrong Construction, paying R78.5m. Erskine said the company's small plant and formwork division opened two new branches in Lephalale in Limpopo and Nelspruit in Mpumalanga earlier this year to expand the division's geographic reach. He said R19m had been set aside to fund this expansion. "The group is looking forward to the new financial year. The business is now well focused and raring to go," Erskine said. "The Armstrong acquisition has been finalized and the expansion of the small plant and formwork division is on track. Tender activity remains strong in Erbacon's target markets and the group is well equipped to take advantage of this," he said.