JSE-listed infrastructure development and construction materials supply company Raubex, in a trading statement, says it expects its earnings a share (EPS) and headline earnings a share (HEPS) for the six-month period to August 31 to be between 10% and 20% lower than that reported for the six-month period to end August 2024.

It expects EPS for the interim period to be between 228.8c and 257.4c, compared with the EPS of 286c reported for the prior comparable period.

HEPS, meanwhile, is expected to be between 227.4c and 255.9c, compared with the HEPS of 284.3c reported for the prior comparable period.

While performance declined compared with the prior comparable period, the group says it remains focused on long-term value creation, underpinned by a resilient business model and a clear strategic direction.

The group's Roads and Earthworks division delivered a strong performance during the period under review, with an increase in operating profit, with growth primarily attributable to the effective execution of the division's project pipeline.

Major South African National Roads Agency Limited (Sanral) projects are operating at full capacity and performing well and the group's concession contracts are progressing smoothly and remain on schedule.

Further, the division benefited from a positive increase in the awarding of new Sanral tenders during the reporting period, including the R3.22-billion contract to upgrade the N2 route between Mkhondo and Bloemendal, and the R2.36-billion contract for improvements along the N2 between Ermelo and Camden.

These new projects effectively replace completed work along the KwaZulu-Natal corridor of the N3, thereby ensuring continuity in the division's road construction pipeline and supporting sustained performance, the company says.

Meanwhile, the Construction Materials division experienced a slower start to the financial year compared with the same period in the prior year, primarily owing to adverse weather conditions during March and April, which impacted on operations and reduced contributions during those months.

The Aggregates business in the division recorded lower-than-anticipated volumes in the first half of the current financial year, but performance has begun to improve in line with better market conditions.

Additionally, the recently commissioned plant upgrades in Gauteng are exceeding expectations, delivering enhanced production returns and significantly improving both output and operational efficiency, Raubex says.

Its operations in Botswana have performed well and continue to contribute positively to divisional results. National Asphalt started the year with a relatively low secured order book, but recent contract awards have significantly strengthened the pipeline and a strong performance is anticipated for the remainder of the year.

Further, Tosas delivered a robust performance during the first six months of the financial year, and this positive trend is expected to continue through the second half.

Meanwhile, the industrial minerals segment in the Construction Materials division has been adversely affected by ongoing uncertainty surrounding the future of smelters in South Africa, resulting in a sharp decline in bentonite sales during the reporting period.

However, the agriculture segment benefited from a favourable rainy season, which led to a substantial increase in gypsum sales and these gains offset the decline in bentonite sales.

Raubex’s Infrastructure division strategy, which concentrates on privately-owned renewable-energy projects, has begun to yield positive results, with a substantial increase in operating profit compared with the previous corresponding period.

Its flagship initiative in the building sector, which is the repair and upgrade of the Parliament buildings in Cape Town, is progressing well and remains firmly on track, the company adds.

Additionally, the design and build of the mechanical and electrical works for the upgrade and expansion of the Potsdam Wastewater Treatment Plant is ongoing and the project is on schedule.

The group’s acquisition of mechanical and electrical engineering and water and wastewater treatment specialist Hlumisa Engineering Services from September 1, aligns seamlessly with its ongoing work on the Potsdam Wastewater Treatment Plant and also strengthens its position in the infrastructure and environmental services sector, Raubex notes.

The group's affordable housing projects continue to develop well, as the South African property market is being stimulated by the recent interest rate cuts.

Sales in the Newinbosch development are outperforming expectations, reflecting growing market confidence. With a noticeable uptick in property activity, the outlook for 2026 remains positive, it adds.

Raubex’s Materials Handling and Mining division is, meanwhile, expected to report a decline in operating profit for the period under review. This follows significant operating losses of R351-million in the chrome operations during the second half of the previous financial year, driven by a sharp drop in chrome prices.

Low prices persisted into the first two months of the current financial year, but a recovery in chrome pricing enabled mining operations to achieve break-even performance for the current six-month period.

At the Kookfontein chrome mine, production was scaled back at the end of last year but successfully ramped up to full capacity towards the latter part of the reporting period.

During the six-month period, modifications were implemented at the processing plant to optimise performance. These enhancements are expected to increase plant capacity and improve overall efficiency and output in the second half of the financial year.

Additionally, the platinum group metals (PGMs) plant at Kookfontein was successfully commissioned, with the first full month of production recorded in August.

Sales of PGMs are expected to start in the second half of the financial year, providing a meaningful boost to divisional performance, it says.

Further, at the Moeijelijk chrome mine, a new underground contractor began operations in April and has been performing in line with production targets. Full production capacity is expected to be reached in the second half of the financial year, which will further enhance performance for the remainder of the year, Raubex adds.

While Bauba, which operates Kookfontein and Moeijelijk mines, has demonstrated significant improvement in the six-month period compared with the second half of the prior financial year, management is currently evaluating the long-term strategic direction of the business, the group notes.

Further, other operations within the Materials Handling and Mining division performed well during the period, with the Namdeb contract, which provides mining services to Southern Coastal Mines in Namibia, delivering a strong contribution.

In Mozambique, despite ongoing force majeure restrictions, operations resumed in the latter part of the first half and contributed positively to regional performance, it adds.

Mining and construction engineering and services company B&E International delivered a solid performance in the period under review, supported by several startup contracts that are expected to gain momentum in the second half of the year.

Meanwhile, the group's Australia division experienced a mixed first-half performance, marked by both challenges and encouraging developments. The division will report an operating loss for the period under review, primarily owing to a single underperforming project.

However, management remains confident in the division's ability to contribute positively to the group's performance in the second half of the financial year and beyond.

OUTLOOK
Despite the challenges experienced during the first six months, Raubex remains confident about the outlook for the remainder of the financial year and the years ahead.

Its secured order book has reached record levels, which provides a strong foundation for future performance.

Additionally, it continues to see significant opportunities to further grow the order book, supported by positive developments in the South African construction market and various government and public-private partnership infrastructure initiatives.

Raubex's diversification strategy has remained a fundamental driver of the group's performance, the company adds.

The group has maintained a strong balance sheet and a healthy cash balance throughout this year and, combined with its diversified operations and strong leadership, is well positioned to extract value from future opportunities.

Raubex will release the results for this six-month period under review on or about November 10.