Earlier this week, the construction heavyweight revised its expected earnings from a trading statement issued on July 5, which had anticipated FDHEPS to be between 45% and 55% lower at between 253 and 309 cents per share.

It said headline earnings per share was expected to be between 45% and 55% lower at 276 cents per share to 338 cents per share, from 614 cents in 2010. Fully diluted earnings per share would be between 185% and 195% lower, showing a loss of 218 cents to 243 cents per share, compared to the 256 cents per share in F2010, the group said.

Earnings per share was expected to be between 180% and 185% lower, pointing to a loss of 224 cents per share to loss of 238 cents per share compared to the EPS of 280 cents per share in F2010.

In July Group Five said that the slowdown within the construction sector in the last two years following the global market crisis had worsened trading conditions in the construction and materials markets.

"This has negatively impacted performance in the current year as the group still benefited in the 2010 financial year from the majority of large public sector contracts awarded ahead of the World Cup. In the interim, to mitigate this environment to some extent, the group has successfully re-entered targeted African markets where it has an established track record," it stated.

And, as outlined in the interim results, the group said that an impairment of its long-term assets held by the construction materials cluster was recorded due to the severity of the materials market deterioration and weaker forecasts. This impairment, Group Five said, remained the material difference between earnings and headline earnings.

"In addition, in the second half of the financial year under review, the group incurred a number of once-off costs which negatively affected headline earnings."

The costs included planned restructuring and rationalisation costs within the construction materials cluster, holding costs in the Middle East following the market downturn, the time discounting effect of reflecting the present value of the unchanged certified debt on one of the group's previously reported cancelled contracts, costs for corrective action that was successfully implemented on a Jordanian pipeline contract and steel supply loss on one near complete joint venture contract in manufacturing.

Save for the abovementioned costs and the effects of worsened trading conditions in manufacturing, the group said that the rest of its businesses had performed in line with guidance issued at the last reporting period.

"In spite of sluggish domestic concessions and PPP activities and the economic pressures in Europe, Investments and Concessions remained stable as new tolling contracts came on line in Eastern Europe and SA.

"Manufacturing and construction materials suffered from a combination of declining volumes, delayed contract awards, a strong rand and pricing pressures. Encouragingly, there have been early signs of price and volume stability returning to the construction materials market in the last few months," the group said.

It noted that with the exception of the Middle East, its largest segment, construction, held up well, based on good contract execution and the benefit of a number of longer term and some African contracts that were strategically secured in previous periods.

Group Five added that the South African construction and engineering market had seen further contract award delays and limited work flow into an industry that was already carrying significant over-capacity. The tender work that was taking place was heavily contested by large and small contractors with extremely aggressive pricing.

"Emphasis on a larger geographical footprint for more of the group's business units and achieving early wins in the re-emergence of the mining and energy markets in Africa remains the strategy to reduce the reliance on weak domestic markets.

"The construction industry in the group's targeted geographies and sectors has solid medium and long term prospects, but in the short term, conditions are worse than envisaged. This weakness is expected to extend for longer, with a slow rate of a broader market recovery materialising from the second half of F2012, which will inform trading performance for F2013," it said.

By noon on Friday, shares in Group Five dropped 20 cents to 27.81 rand on the JSE, having reached a year high of 41 rand in November 2010, and a year low of 24.40 rand more recently, in March.