Group Five seeks share of R37bn building boom

Posted On Friday, 18 February 2005 02:00 Published by eProp Commercial Property News
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THE domestic construction market could grow as much as 10% this year and reach levels last seen in the 1980s, Group Five said after the release of solid interim results yesterday.

Mike LomasTHE domestic construction market could grow as much as 10% this year and reach levels last seen in the 1980s, Group Five said after the release of solid interim results yesterday.

SA’s annual construction spend could grow to about R37bn in four years from about R27bn at the moment, data presented by SA’s third largest construction group showed.

The upbeat outlook follows a flat market over the past few years.

However, SA’s construction companies needed to urgently address skills shortages if they were to capitalise on opportunities expected to develop from increased government spending, said CEO Mike Lomas.

Group Five posted a 19,5% jump in headline earnings to 53,3c a share for the six months to December compared with that of the previous corresponding period. Revenue increased 13% to R2,3bn.

The group also announced that it had entered into talks on an empowerment deal.

The market reflected slight disappointment with the results, however. The share price dropped 3,55% to end the day at R14,95 yesterday.

Some analysts expected a better performance. "Group Five should be in that sweet spot of interest-rate-led activity right now," said a construction analyst.

Group Five said the results were pleasing, and were achieved despite the effects of the rand’s gains on hard currency revenues and the continued deferment of large capital projects during the period.

The group’s profit margin slipped slightly to 3,4%. It attributed the decline to the rand’s gains and an explosion at Sasol’s Secunda plant, which forced Group Five’s DPI plastic-pipes manufacturing business to import raw material at higher costs.

The company’s construction division, which accounts for 76% of its revenue, posted improved results but contributed only 40% of the profit before interest and tax.

The previously struggling roads business within the construction unit had been halved in size and the group was seeing benefits from the move, Lomas said.

Civil engineering remained the area of concern within the construction unit, as large projects mainly in the resources industry were still deferred and public sector spending remained slow.

 

Group Five expected to post improved annual earnings for the fifth consecutive year.



Last modified on Saturday, 19 October 2013 14:58

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