Photo by: Duane Daws
A roads project on the N4 that took 42 months to complete instead of 30, had cost Esor dearly, said CEO Wessel van Zyl on Thursday as he unveiled the construction group’s financial results for the six months ended August 31 in Johannesburg.
The total loss over the life of the project, which started in May 2011, was R158-million.
The project was tendered at breakeven, said Van Zyl, in the hope of keeping plant and staff busy to the next round of toll-road contracts in Gauteng, which did not materialise. Several factors also played havoc with the project, such as the steel and fuel industry strikes of 2012 and 2013.
Productivity achieved at the project was also at 60%.
“We were there too long with too many resources,” said Van Zyl.
The good news, however, was that the project had been completed.
All problematic issues and outstanding claims around work at the Kusile power plant had also been wrapped up, said Van Zyl.
“We have R800-million of work left at Kusile. It will take around three years to complete and we are making money.”
Esor on Thursday reported a 22.2% drop in revenue for the six months ended August 31, to R790-million, compared with the same period last year.
The group also reported an operating loss of R31-million, compared with a loss of R8.9-million in the previous period.
Looking ahead, Van Zyl noted that Esor would focus on the recovery of its civils division.
Part of this recovery would include a second round of retrenchments. The group had already laid off 52 employees, with another 80 to follow at its plant department.
The pipelines division delivered profit for the six months – compared with the loss-making civils division – despite delayed contract awards and increased competition from new entrants into the market.
Esor’s residential developments division had seen a slow start to the financial year, added Van Zyl.
However, this division had some good prospects, he noted.
Calgro M3 and Esor had established a joint venture to construct the required 9 000 housing units for the Diepsloot East integrated residential development, through Esor selling 50% of the development to Calgro.
Esor had a two-year order book of R2.35-billion at end of August, compared with R2.6-billion at the same time last year.
Around 85% of the book was government work.