WBHO (WBO) – Not entirely out of the woods

WBHO experienced favourable conditions in Africa. In the UK, it faced headwinds but was still able to produce solid growth and, with the deconsolidation of Australia, earnings improved significantly.


The building and civil engineering division experienced increased activity in the period, driving strong revenue and order book growth, which boosted operating profits. The division has benefitted from an increase in renewable energy projects and fewer competitors in the construction market.


Roads and earthworks recorded a weak performance in 1H23 but secured a significant amount of new work during the period and post period-end, including two large SANRAL projects. These projects tend to have a lower operating margin and these regions have experienced high community and Construction Mafia disruptions in the past. Further, one of the projects awarded to WBHO is being disputed, which will cause delays. We remain cautious on those projects.


The United Kingdom remained under pressure in the first half of FY23, recording weak growth. Byrne Bros. and Russells both struggled in the tough conditions, while Ellmers was the standout performer. Without the purchase of O’Keefe, the division’s revenue would have contracted by 20% y-y. The order book did improve between June and December, once again aided by O’Keefe, but Russells’ order book will need to improve significantly to raise the operating margin. Post period-end, the division secured a significant amount of work and management is confident of an FY24 recovery for Russells, but we remain cautious on the prospect of securing £100m in new projects by the end of the reporting period.