Construction and Building Products has been saved
Construction and Building Products
Given the significant drive into rapidly growing African economies, the Deloitte construction team is well positioned to use their specialised knowledge of the industry to partner with our clients to deliver cost effective solutions that help improve the delivery of capital projects which meet their objectives.
Our construction and building products practice services the top 10 construction companies in South Africa, from Assurance, Tax, Risk Advisory to Consulting.
We provide specialised resources to assist in our clients' efforts to improve the delivery of capital projects and help meet their program objectives.
Our team is composed of professionals with practical industry experience in nearly every aspect of the capital programme lifecycle, and with advanced degrees in engineering, architecture, business, banking, accounting, environmental sciences, actuarial and law.
We also monitor a number of trends in the construction and building products sector:
•Consolidated Industry in South Africa: The industry is dominated by 7 listed companies, Murray & Roberts, Aveng, WBHO, Group Five, Stefanutti Stocks, Raubex and Basil Read which account for much of the heavy construction industry in South Africa.
•Pressure in shareholder returns: The industry is under pressure due to value destruction over the few years. Numerous entities are now trading at a discount to NAV.
•Growth concerns prevail: Construction growth in Southern Africa is under pressure due to low growth and low levels of government infrastructure spend.
•External events: External events are impacting the industry, notably low commodity prices and ongoing industrial action challenges.
•Underperforming businesses and capital allocation: Difficult trading conditions in several sectors are placing pressure on overall business performance. This is compounded by low margins across most construction sectors. Construction entities are having to revisit business models and service offerings.
•Capacity: The industry is facing over capacity in the South African market, but at the same time there is a severe technical skills capacity at lower levels. The industry is in dire need of extensive training at the trade levels. Adding to the capacity issues is the increasing complexity of mega projects.
•Cash flow challenges: The industry is under significant cash and working capital challenges, due to legacy contracts and work in progress that is taking longer to resolve.
•Challenges of accessing funding: Projects in both private sector and public sector are under pressure to raise funding for projects. While project funds are available, a key challenge is matching project concepts to bankable feasibilities.
•Cross border: Construction entities looking for growth, are increasingly looking for cross-border for opportunities. Key trends across Africa are those concerning Power, Transport and Urbanisation. By 2040, Africa is expected to have more than 100 cities of more than one million inhabitants and 7 cities of more than 10 million.
Refer to the “Discover more” tab above, to find out more about some of our manufacturing insights and services.