Fast moves lift Protech earnings 55%
May 12, 2009
By Roy Cokayne
The ability of Protech Khuthele Holdings to move quickly to the most lucrative growth markets helped the listed civil engineering group achieve an extremely strong financial performance in the year to February.
Protech, which focuses on fast-track bulk earthworks contracting, yesterday reported 55 percent growth in headline earnings a share to 26c.
Revenue rose 91 percent to R702.7 million and operating profit 61 percent to R156m.
Chief executive Gerald Chapman said the group was able to mitigate the effects of the meltdown in the private sector by getting into more lucrative markets.
"We eat at the restaurant where the food tastes the best."
Chapman said Protech had reduced its exposure to the private sector from 57 percent to 27 percent while lifting its exposure to the mining sector from 21 percent to 46 percent and the public infrastructure sector from 22 percent to 27 percent.
Protech had a 100 percent record of never finishing its work on time, he said, because it always completed contracts ahead of time, resulting in financial benefits to both clients and shareholders.
The operating margin slid from 26 percent to 22 percent.
Chapman attributed this mainly to lower margins from its Readymix operation. Without Readymix, margins would have remained at 26 percent.
Readymix, a volume-driven business, had 95 percent exposure to the residential sector when acquired. This had been reduced to 20 percent and management was working hard to obtain greater exposure to the infrastructure sector.
In line with company policy, a dividend was not declared.
Chapman said the group would continue to drive a mindset geared for successfully combating the recession.
Work in progress was a healthy R735m, which meant it had secured 60 percent of the revenue achieved this year for the 2010 financial year. Its financial position was robust, with bad debts of less than 1 percent due to its blue-chip client base.
Chapman said none of the group's contracts had been cancelled and tender activity was strong, but more competitive.
The stock fell 2.4 percent to close at 83c yesterday.
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