WBHO CONSTRUCTION
WBHO CONSTRUCTION
Spreading Its Reach
Far and Wide
PRODUCTION: Timothy Reeder
Wilson Bayly Holmes-Ovcon (WBHO) Construction is among the largest construction companies in Southern Africa, with decades of experience in major projects spanning Africa, the Middle East and assorted Indian Ocean islands. It has copious large projects ongoing in South Africa, and has recently set its sights on expanding its presence in the UK market and further afield. www.enterprise-africa.net / 3
INDUSTRY FOCUS: CONSTRUCTION
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Take one look at WBHO Construction’s current project list and you would be hardpressed to believe the extent of the negativity surrounding the industry in South Africa at the present time. The ventures which it has underway range from developments in the building and construction sector to roads and earthworks, passing through civil engineering and the specialist WBHO pipelines arm of the business. Its all-time highlights include such feats as the enormous 81MW Kathu Solar Farm, a concentrated solar power (CSP) thermal energy power plant, where WBHO commissioned the 340,000 solar panels on schedule required to power up one of the largest present-day solar farms in Africa. WBHO has also completed several significant projects at South Africa’s principal airport, OR Tambo, which handles more than 50% of the country’s air traffic. These have included construction of a central terminal building, four aprons, rapid exit taxiways, helipad and numerous utility services. In progress at WBHO, meanwhile,
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are the likes of the Sable Park Offices in Cape Town, a development consisting of two towers, each with four levels, totalling approximately 35,300 m2, and the 32 multi-storey Blocks which will comprise the Milkwood Social Housing complex in the Eastern Cape. AGAINST THE GRAIN WBHO’s relentless pursuit of more varied, impressive and experimental constructions flies in the face of what most consider to be the accepted state of the construction industry as a whole in South Africa at present. In the midst of policy uncertainty, slow economic growth and an underperforming Rand, it has become commonplace not to ask what the state of play is in the industry, but rather to ask quite how bad the situation is, and whether it offers any hope of recovery. 2017 was a particularly challenging year when it came to the health of the field, with a combination of a reduction of skills, budgetary constraints and a desire on the part of the government to divide projects into smaller components in support of emerging black
empowerment-based SMMEs leading to dramatic rationalisation of the industry. By September 2017, confidence was at its lowest level since the third quarter of 2000, and the slow increase in construction activity, pegged at just 3% year-on-year, and a contraction of around 1% in the value of spending, contributed to poor growth. However, despite the apparent gloom, the past two years haven’t been entirely without reason for optimism. According to a report by Statistics South Africa, the number of building plans passed in 2016 rose by 6% compared to the previous year, and the total value of newly constructed buildings grew by 8.3%. It might take some time for the general feeling of negativity and unease to subside, but positive news is starting to filter through more regularly. In 2018, it is forecast that the construction industry can look forward to moderate growth, with the government’s plan to spend more than R940 billion on infrastructure development coming as a welcome announcement. In particular, social housing, renewable
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energy and roads infrastructure projects are expected to sustain growth, while urbanisation and semi-migration are also viewed as drivers of growth. In short, BusinessReport’s confidence that “the [construction] industry is poised to benefit in the medium to long term,”
looks set to prove to be well-placed. “The commitment by new leaders to focus on growing the economy presents an opportunity to boost the industry,” it continues. “Investor confidence is said to be very high, the highest it has been since 2009.”
// THE COMMITMENT BY NEW LEADERS TO FOCUS ON GROWING THE ECONOMY PRESENTS AN OPPORTUNITY TO BOOST THE CONSTRUCTION INDUSTRY //
SUSTAINED GROWTH As khplant points out in its 2018 Outlook for SA’s Construction Industry: “the construction industry typically lags the general industry in South Africa by about six months, so any green shoots in the local economy may well be early indicators of a more robust construction sector in the months to come.” The previous uncertainty in the sector, combined with the delayed reverberations of improved performance, has driven many established companies to explore
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the lay of the land in foreign climes, and WBHO has been keen to explore different territories. The origins of the present WBHO group date back to 1970, when Wilson-Holmes (Pty) Ltd was formed by John Wilson and Brian Holmes. A number of mergers followed resulting in the change to Wilson Bayly Holmes (Pty) Limited in 1983, and, finally, to WBHO Construction in 1994. Today the group’s offices are strategically located in Johannesburg, Cape Town, Durban and Port Elizabeth, and to most observers this is a company rooted in its South African heritage. While this remains true, the local construction market is still undeniably extremely tough, says WBHO CEO Louwtjie Nel, who states that, “our industry is being disseminated in South Africa.” As a consequence, WBHO is calling more and more upon the
WBHO CONSTRUCTION
// STRINGENT BID IDENTIFICATION AND SELECTION, WELL EXECUTED PROJECTS AND CONTAINMENT OF OVERHEAD EXPENDITURE HAVE BEEN PARAMOUNT // opportunities it has grasped in the UK, Australia and wider Africa to continue delivering the strong results for which it is renowned. In September, WBHO was able to report a 9.8% increase in revenue to R35 billion, R1 billion operating profit, up from R780 million in the previous financial year and headline earnings per share of 1,414.6c, up 8.1% from the previous financial year. FOREIGN OPPORTUNITIES The positive performance was helped greatly by the strong revenue growth brought by Australia, whose contribution increased from 58% to 63%. The revenue contribution from South Africa dropped from 36% to 30%, but the local market still contributed about half the operating profit, and Nel explained that, crucially, the group’s current R54 billion order book is now
well balanced between South Africa, Australia and the UK. The decision to focus its strategy in part on the UK market came as the country presented WBHO with clear growth opportunities. The group said the UK construction market has seen solid progress in recent years, particularly in London and the north west. “The construction environment is similar to that of Australia, with the main contractor fulfilling a construction management role with the different packages of projects being let to subcontractors, and as such was identified as offering the most potential at acceptable levels of risk,” WBHO outlined. The diversification of its interests allowed WBHO to post encouraging results in spite of low growth, a volatile rand exchange rate and political
events, which have all hampered South African business confidence. “The group delivered a credible set of results this year, where market sentiment in Australia and the United Kingdom was positive, while the local construction environment deteriorated rapidly with a number of large and medium-sized contractors facing financial difficulties,” WBHO concluded. “Locally, building activity continues to subside which when combined with low levels of public infrastructure spending, has seen a significant decrease in overall activity within the sector. In addition, activity in the group’s targeted markets in the rest of Africa remained relatively stagnant. Within this climate, stringent bid identification and selection, well executed projects and containment of overhead expenditure have been paramount in delivering profitable results for the overall African business.”
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