Balanced business mix cements Group Five's success

Posted On Tuesday, 14 August 2007 02:00 Published by
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Group Five's strategic refocusing was reflected in its solid set of results for the year to June released on Monday.

Mike UptonThe group's revenue increased 31,1% to R7,7 billion from R5,9 billion last year.

Most significant was the strong growth in profitability, especially the group's achievement of a 5,1% margin.

According to CEO Mike Upton, this was achieved by the group's focused strategy of building a balanced portfolio of businesses across the construction sector and a particular focus on improving margins in its main business, construction.

The group also replaced the revenue and margins of its disposed businesses, Vaal and DPI, with higher-margin businesses in the materials sector.

The construction sector has evolved, requiring companies to develop expertise beyond basic construction to increase capacity to take on larger and more complex contracts from inception to completion.

The group has a clear strategy and three core revenue streams across construction, investments and concessions, and manufacturing and building materials.

Upton said yesterday the group saw organic growth in investments and concessions and the rationalisation and acquisition of materials businesses as the route to improved margins and sustainable performance.

With the group's one-year order book at R4,8 billion and capacity of about R7,3 billion, the strong market provides significant scope for Group Five to choose higher-margin contracts.

With a new strategy that is meant to ensure a balanced business mix, the group can expect to achieve further earnings growth in the 2008 financial year.

Group Five's competitors have also seen growth as the R100 billion a year construction sector continued grow, with Murray & Roberts announcing that its order book had increased to R22 billion in March this year, up from R15 billion in December last year.

Wilson Bayly Holmes-Ovcon started this year with an order book of R5,3 billion.

 

Last modified on Tuesday, 15 October 2013 13:11

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