CONSTRUCTION group Basil Read's share price fell about 10%, or 24c, to close at 210c yesterday after it alerted shareholders that earnings could drop more than 30% in the six months to June compared with the corresponding period last year.
A sector analyst warned that most, if not all, other listed construction companies were likely to report significant profit falls in the next few months.
Basil Read could not be reached to elaborate on the warning, but the analyst cited continued poor market conditions as the likely reason for the fall.
The strong rand has forced large capital projects in SA on to the back burner, and the currency's appreciation in the first half of the year continued to reduce revenues from cross-border contracts.
There was an upturn in the lower end of the construction market, which included projects such as retail complexes, office blocks and housing developments, on the back of last year's cumulative 5,5% interest rate cuts.
But the analyst said that the biggest beneficiaries of lower interest rates in the construction sector had been the "bakkie brigade" small contractors that specialised in housing.
Basil Read ended last year in better shape, boosted by the R78m sale of its stake in Trans-Africa Concessions, the consortium that built and operated the Maputo Corridor.
The sale, in the latter half of the financial year to December, helped push net revenue up to R40,3m for the year to December, from just R11,6m in 2002. It helped the company to pay off its debt and strengthened its balance sheet.
Basil Read is 70% owned by French construction group Bouygues.