The recent year-end results from infrastructure development and construction materials supply group Raubex indicated a mixed performance, despite the optimistic narrative articulated by CEO Felicia Msiza.
The key highlights were a stellar profit swing from mining business Bauba Resources, alongside a surge in infrastructure profits from renewable energy contracts. However, a thumping loss in Australia took the wind out of overall earnings.
Total group revenue rose 4.9% to R22bn, resulting in an 11.6% increase in operating profits to R1.74bn. Headline earnings edged up 1.9% to 611c a share. A slide in profits from aggregates due to poor weather, a loss-making mining contract in Australia and lower interest rates hit finance income, weighing on the bottom line.
The total dividend for the period rose 2% to 202c a share. Raubex ended the year with a cash balance of R1.87bn (a dip of 11% year on year).
Scratching beneath the surface, net cash generation slumped 40% to R1.17bn as higher levels of inventory (up 13% to R1.8bn) within construction materials and Bauba tied up cash. Lower interest rates meant finance income dropped 27%, or R50.7m. Raubex was also lax in collecting cash from outstanding debtors, with collections pushing out from 38 to 43 days.
Positives were major contract and tender wins in roads and renewable energy; the overall Raubex order book increased 11.6% to R31.5bn. At the same time, a strategy of pushing for more contracts from the private sector to reduce the concentration risk from government entities is under way.
Raubex saw a surge in private sector contracts, comprising 34% of the order book with a value of R10.6bn. The South African National Roads Agency Ltd (Sanral) had 22% of orders worth R7bn, with international (18%) at R5.6bn. Almost R18bn of works is in the bag for 2027 with a solid tail to 2030.
With global political uncertainty washing into the local economy, the easy money in Raubex has likely already been made
Raubex has five pillars: Australia, construction materials, infrastructure, material handling, and roads and earthworks.
In Australia (a graveyard for many South African companies), revenue slipped 14.4% to R2.94bn, while operating profit slumped to R60.4m — a sharp reversal from the prior year’s profit of R304m. A mining contract there cost Raubex R177m. However, management signalled that growth is returning.
Construction materials took a hit as operations were hampered by poor weather. The closure of ferrochrome smelters also affected volumes. Revenue rose 8% to R3.5bn, with profits down 13.4% to R312.5m. However, recent contract awards have strengthened the pipeline with a 40% increase in orders to nearly R3bn.
Infrastructure was the star performer with a 30% surge in revenue to R4.3bn. Profits are ahead 42% to R430m as the energy portfolio continues to gain momentum. The order book rose a modest 2% to R7.5bn, which needs to be monitored given the division’s heft to group profitability. In renewable energy, a R2.4bn wind cluster and a R1.66bn solar PV contract in Beaufort West highlighted the intake in the period with run-off to 2030.
Materials handling had a 3% dip in revenue to R4.1bn, but a surging chrome price alongside sales of platinum group metals (PGM) brought a massive improvement in profitability from R4.2m in 2025 to R445m in 2026. Bauba delivered a solid turnaround, with operating profit rising sharply from a loss of R235.8m in 2025 to a profit of R243.7m in 2026 — a 203% improvement. Raubex is still deliberating on Bauba’s future in its portfolio.
Roads and earthworks had a fair performance with revenue up 5% to R7.1bn and profits up 4% to R613m, though the order books were 6.7% softer at R12.7bn. Msiza noted the group has won large Sanral contracts such as the R3.22bn N2 Bloemendal to Piet Retief award and the R2.36bn tender for the road between Verzameling and Leiden.
Overall, the outlook is encouraging given the order book. Msiza expects ongoing improvement in Bauba and a doubling of PGM sales, as well as further tenders in roads and renewable energy. She highlighted the diesel cost challenge but said 60% could be recovered.
The share price has risen 15% year to date and 30% since the start of December as the market anticipated the earnings recovery. With global political uncertainty washing into the local economy, the easy money in Raubex has likely already been made.
Prospects seem fair for the year ahead. The stock may yet move higher, but IM will wait for interim earnings to see how the landscape develops.
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