African story moving beyond mining
CE0 Mike Upton said the local market appeared to be starting to bottom, however uncertainty and risks were set to continue for longer.
“The African story is starting to go beyond just mining,” Upton said, noting that in building and housing, the group had re-entered central and west Africa, while three projects were being executed in Zambia. In South Africa, particularly in Gauteng, the private sector remained “exceptionally competitive,” while KwaZulu-Natal was more buoyant than the Cape.
In its civil engineering department in South Africa, Group Five said awards remained low, with many projects being delayed, while timeframes on secured work were being extended.
A very competitive bidding environment also put pressure on margins, it said. Upton said the South Africa government was failing in terms of its infrastructure policy and delivery. He highlighted the trillion-rand infrastructure budget, and stressed “backlogs and bottlenecks have to unlock. SA is desperately short of infrastructure. That is SA’s weakness in terms of growing faster”. Looking ahead, Group Five said margins were still under pressure, and were unlikely to improve until financial year 2013. Upton said that cash preservation would be a priority to fund growth. For the full year 2011 Group Five reported cash in hand at R2.2 billion, down from R3.1b in 2010, and a total operating margin of 5.4 percent.
Revenue declined 19 percent to R9.2b for financial year 2011. – Business Live