JSE-listed Esorfranki on Monday reported a return to profitability during the year ended February 2012, following a significant loss in the prior year.
The civil engineering and construction group achieved an after-tax profit of 18.2-million, an increase of 145% compared with a loss in the 2011 financial year of R40.7-million, after implementing a number of rationalisation and optimisation processes in all divisions, said CEO Bernie Krone.
He also attributed the turnaround to the completion of a number of “problematic” contracts and the implementation of a number of stringent policies aimed at tender and project execution.
Further, the company secured a number of significant contracts during the year, particularly in the last quarter, despite tough market conditions, and currently held a R1.8-billion order book.
He added that earnings before interest, tax, depreciation, impairments and amortisation increased over 170% to R132.7-million, while headline earnings a share jumped 148% to 6.2c
Revenue increased 30% from R1.4-billion in 2011, to R1.8-billion.
The Esorfranki Civils division, which accounted for 46% of the group’s revenue, increased its revenue 59% to R820.4-million.
The Esorfranki Geotechnical division, which recorded a 4% revenue increase to R723.5-million, experienced a 34% growth within foreign-based operations while the revenue for the South African-based operations dropped 8% on the back of intensifying competition.
The geotechnical division completed its first contract in Ghana, worth R13-million, and had a further three potential contracts lined up worth R120-million, said Krone. The group, which also expanded into Uganda, reported seeing increasing potential in both East and West African markets.
Esorfranki Pipelines revenue jumped 35% to R227.8-million.
“We managed a successful turnaround following difficult times and put the group firmly on track for growth,” he said.
Krone said that Esorfranki would focus on expanding its African footprint, to strengthen and diversify its revenue streams. However, the company would be prepared should domestic opportunities be available.
Further, Esorfranki aimed to reduce its reliance on government work and would focus more on securing contracts within the private sector.
He pointed to a slowdown in public infrastructure spend, despite the government’s renewed commitment to infrastructure development, which he believed was inconsistent.
Esorfranki had committed to a capital expenditure of R414-million during the next year, an increase from the R257-million spent in 2012 and R40-million in 2011.
The company aimed to achieve revenues of about R2.8-billion in the 2013 financial year.