Willie Meyburgh, CEO of JSE black-empowered civil engineering and construction group Stefanutti Stocks, says that the company is gearing up for construction and infrastructure activity after 2010, the benefits of which many industry players believe will start to kick in during 2011.

“The 2010 World Cup is a milestone for infrastructure spend, but all indications from our market intelligence and surveys show there is still work around that should be put out to tender,” says Meyburgh.

“We understand that there will be spending by Sanral on the ‘R’ roads, for which several tenders have been put out over the past year or so, with still more expected.

“The next phase of the Gauteng freeway improvement project is expected to come to tender during the latter part of 2012. What we are currently experiencing is that some of the mining houses have started to put out inquiries, some of which we are now hopeful of obtaining as awards.”

Potential activity is not confined to SA, says Meyburgh, but is evident in neighbouring southern African countries.

“We certainly see some good growth there and we also believe there will be expansion in dams and water projects both inside and outside SA.

“In addition, there is peripheral work of reasonable size for which tenders are being put out that should come to the market in the next 12 months.”

Meyburgh says in future electricity will have to be transmitted from the Kusile and Medupi power stations to the power grid. Eskom has expansion plans for transmission and distribution that will provide opportunities for their group’s mechanical, electrical and power business unit.

“In the building market, especially in Mozambique and other neighbouring countries, we have experienced good growth. We have also seen expansion this year both in KwaZulu-Natal and Gauteng, predominantly through private sector clients.”

He says the government sector is currently quiet “but I believe they need to become proactive soon because the country has this fantastic opportunity to deliver on its infrastructure and services requirements as a result of construction companies building up spare capacity, which they should take advantage of. We moved from a turnover of R2,5bn in 2008 to slightly short of R7,5bn in 2010.”

Meyburgh is realistic about the 2011 financial year, with continuing margin pressure as a result of increased competition.

“The 2012 financial year looks more positive, with a promise of recovery based on continued expenditure in the private sector, an ongoing commitment by Sanral and a number of Africa initiatives.”

He says that the company has maintained its strong track record since listing with double digit top and bottom-line growth for the year-end February, despite tough market conditions.

“The group’s broad range of services, a wide South African and southern African footprint and strong management were the leading drivers of our resilient performance.”

He is pleased with the group’s performance in the face of a drop in government infrastructure contracts out to tender and reducing profit margins. Geotechnical, civils and marine projects remained the key contributors to profit. In SA, these included grouting for the Gautrain and the interchange at the new King Shaka Airport in Durban. Elsewhere in Africa, work on two platinum mines was concluded.

Meyburgh says that while a number of large-scale infrastructure and marine projects are still available in SA, the business unit will look to cross-border markets for higher margin projects to counter intensifying local competition.

“We delivered successfully and timeously on all our 2010 World Cup-related projects, specifically the major undertaking, in joint venture, of the upgrade at Cape Town International Airport. Further, great strides were also made with operations outside SA.”

Roads & Earthworks opened a new asphalt division during the year to facilitate securing large road rehabilitation contracts. Meyburgh says that although the market will undoubtedly become more competitive it remains a growth avenue for the group.

“There are good ongoing opportunities in the local market and we will also target road contracts in Africa to sustain momentum,” he says.