Raubex: A Record-Breaking Resurgence for Raubex

Founded by industry legend Koos Raubenheimer in 1974, Raubex’s complete service is made possible by the complementing offerings of its three divisions – Roads, Infrastructure and Materials – combining to employ almost 8000 people across the group.

Established as an Africa-leading diversified heavy engineering company, Raubex Group’s success in infrastructure development has led to a portfolio numbering projects from road construction and rehabilitation to urban reticulation and infrastructure, construction of renewable energy facilities and mining services, including materials handling and ore beneficiation.

SIGNIFICANT SECTOR SPENDING

While the SA construction industry keenly felt the impact of the Covid-19 pandemic, growth of 6.1% in real terms is still forecast in 2021, a vast improvement on the 16.5% contraction in 2020.

This has been buoyed significantly by the government announcement of a 10-year infrastructure investment plan worth ZAR2.3 trillion (US$124.7 billion), with funds pledged to the housing, energy, agriculture, transport, water and sanitation and digital infrastructure sectors.

For Raubex, despite the understandable unease which is accompanying its future forays in this toughest of sectors, the green shoots of this promised investment make the overwhelming feeling one of opportunity.

“Government’s intention is to invest in infrastructure to get the economy moving,” CEO Rudolf Fourie told Daily Maverick, and Raubex is well-positioned to benefit as one of the few listed construction firms of scale still standing after the trials of the past 10 years. 

A decade ago, Raubex was the seventh largest JSE-listed construction firm, falling outside of the so-called ‘Big Five’. Today, it, Stefanutti and WBHO are still standing.

Maintaining its investment in ‘people and plant’ during the lockdown came at a cost, but means that, crucially, the company is now poised and ready to scale up as demand increases. “Tenders for infrastructure mega-projects are slowly coming on stream, and there are just a handful of companies that can do the work,” Chantal Marx, head of Investment Research at FNB Wealth and Investments, states of the bounteous prospects ahead. “Raubex is well positioned.”

In 2019 investment in infrastructure spending saw its first uptick for three years, and while the pandemic brought things to a temporary and, for some ruinous, standstill, the change is now noticeable for Raubex.

“We have tendered on 70 projects ranging in size from R50-million to R1-billion in the last four months. Sanral is back. The big water boards are back. It looks like a clear intention by government to invest,” Fourie says, with the two major contract awards by Sanral alone totalling a value of R2.87-billion. 

RECORD ORDER BOOK

“Raubex is renowned for its healthy balance sheet and strong cash flows,” Marx adds, “and this puts it in a very comfortable position.” This is crucial when it comes to the award of mega-projects, and what separates the major players from those beneath them: a balance sheet that can support hefty guarantees on the part of the contracting company.

Mercifully, Raubex’s is in rude health, with its secured order book at unprecedented, record levels following a recovery during the second half of the financial year. Its value has rocketed by 68.9% to R17.1-billion, from the previous R10.1-billion, backed by further significant unsecured contract opportunities, tendered and pending adjudication.

The group stresses that it will participate in these projects from both a construction and material supply perspective, and the current picture is further evidence of the resilience for which it has become renowned.

Raubex’s finance costs decreased to R22 million from R34.3 million in the prior year. Cash generated from operations increased by 68.2% to R1.33 billion from R790.2 million in the previous year, before finance charges and taxation, with the strong cash generation during the year attributable to a decrease in working capital.

The group had a net cash inflow for the year of R872.1 million, and total cash and cash equivalents at the end of the year of R1.88 billion up from R1.01 billion during the prior year.

“We are further encouraged by the good recovery that was made by the group in the second half of the year, a significant increase in tender activity and some major construction contracts that were awarded to the group,” Rudolf Fourie assessed.

“With the secured order book now at a record level, the group’s strong management team, supported by a healthy balance sheet, position Raubex well for future growth.” 

PROJECTS PROGRESS AT PACE

Two of Raubex’s most high-profile building projects have hit the headlines in recent months. The expertise of Raubex Building, an integral part of the Raubex Group’s infrastructure division, has dealt a big boost to the renewal of Johannesburg’s city centre, via the refurbishment of Union Square, a 19-storey block at 80 Plein Street in the heart of the original central business district.

“The building was previously an office block, and is being repurposed for residential use,” explains Juan Jardim, senior site manager when delineating the project’s innovations and challenges. “This means the installation of considerably more walling and other infrastructure than the building was initially designed for.” 

At street level, the ground floor will be used as retail space, while each of the first to 19th floors accommodates 18 residential units, ranging from bachelor flats to four-room communal cluster units.

“This project provided us with another opportunity to support local participation,” Jardim says, “with the use of local labour and to train small local businesses, mainly in carpentry, specialised walling system installation, tiling, brickwork, plastering, painting and electrical work.”

Also nearing completion for Raubex Building is a high-security block in the Jewellery Manufacturing Precinct (JMP), a project of the Gauteng Growth and Development Agency (GGDA) and part of the Gauteng Industrial Development Zone (GIDZ). A key part of a mixed-use master plan incorporating industry-specific facilities for precious metal and gold beneficiation, the project has required a core team of 40 staff on site and a total complement of as many as 200 at peak time.

“We are not focused on run-of-the mill projects and are known for our ability to constantly shift the boundaries on niche projects with high time constraints, difficult terrain or projects that are technically complex,” Raubex Infrastructure says, and this success has yet again proved it true to its word. The complexity of the building, a result of both the high-security environment and the different requirements of the tenants, has demanded close collaboration and endless innovation.

“With its emphasis on security, this was certainly not a conventional project,” site manager Dwayne Nunez underlines. “Our success to date demonstrates the expertise within Raubex Building, and our ability to communicate effectively with our partners to accommodate the project’s more complex elements.”