A World Cup boost?
By Murray Pollok10 April 2008
South African rental companies can expect to benefit from the boost to infrastructure spending as South Africa prepares to host the 2010 World Cup, but according to Dave Erskine, founder and chief executive officer of Durban-based contractor and rental company Erbacon, the World Cup is merely the icing on the cake of an already booming construction market.
“The World Cup is a minor factor in the growth”, he tells IRN, “The government has started a R400-500 billion (€40-50 billion) infrastructure investment programme, and the South African electrical utility company has a further R200-300 billion (€20-30 billion) spending plan. That's the backbone – we're seeing growth that we haven't seen since the early 70s.”
Mr Erskine says the substantial growth will continue 10 to 15 years, which, coupled to the ongoing switch to outsourcing, is good news for his rental business. Based in Durban and specialising in renting non-operated plant and with a scaffolding and formwork division as well, the firm has been growing dramatically, forecasting a doubling of revenues to R76 million (€7.5 million) for the year to the end of February 2008. A target that the company is on target to meet.
Mr Erskine says the plan is to continue to expand the fleet and also look for acquisitions. He says the company is currently in negotiations with a potential acquisition target in the Johannesburg area. It will also open two new depots this March, one in the North and one in the East of the country, both locations where major projects are underway. One is a power plant and the other is a platinum mine. The business already has depots in Durban, Richards Bay, Ballito, Port Elizabeth and Johannesburg.
Erbacon Plant Hire accounts for a third of all revenues in the group, with the main business still being contracting. Just 5% of Erbacon Plant Hire's revenues are generated with its sister contracting business, says Mr Erskine. The group recently floated on the Johannesburg stock exchange.