https://www.engineeringnews.co.za

Group Five hopes restructuring will lift margins

23rd August 2013

By: Irma Venter

Creamer Media Senior Deputy Editor

  

Font size: - +

JSE-listed construction company Group Five has reported net profit of R299-million for the financial year ended June 30, reversing a R230-million loss recorded in 2012. Revenue from continuing operations was up 27% to R11.13-billion.

With almost all the group’s problem contracts in the Middle East closed out, as well as its lossmaking construction materials businesses sold, Group Five CEO Mike Upton says he is “pleased to show an improved set of results”.

The group’s operating margin improved from 3.8% to 5%, while all the company’s business units showed a healthy increase in core operating profit and revenue.
Group Five’s construction order book also jumped 26% from June 2012 to June 2013, reaching R14.23-billion.

With 79% of order-book business in South Africa, and 21% in the rest of Africa, Upton says Group Five remains firm in its intent to secure more business cross-border.
A noticeable trend in the construction order book, broken down by sector, is that Group Five’s participation in the mining industry dropped from 20% in the previous financial year to 10%. However, Upton regards this as a positive move, as it reduces the group’s reliance on a single sector.

In contrast to this, contracts in the oil and gas sector increased from 8% to 15% of the order book, with business in the power sector up from 20% to 22%.
The real estate sector made up 34% of the order book.
The group’s nonconstruction, annuity-type, multiyear secured order book stood at R4.8-billion on June 30.

Commenting on the South African market, Upton says there is no indication yet of government’s infrastructure expansion plans coming to fruition.
He also notes that the local construction market remains tough, with low margins, especially in the building sector. Certain disciplines, such as roads, also face low prices.

Group Five’s pipe business, however, expects a record year in terms of volumes.

“We are concerned about increased labour activism,” adds Upton.

Looking ahead, he says he expects modest improvements in group margins and earnings for Group Five in the 2014 financial year, with this linked more to the company’s internal restructuring than the slight market recovery seen to date.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Environmental Assurance (Pty) Ltd.
Environmental Assurance (Pty) Ltd.

ENVASS is a customer and solutions-driven environmental consultancy with established divisions, serviced by highly qualified and experienced...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.078 0.129s - 150pq - 2rq
Subscribe Now