South Africa’s construction giant Group Five has acknowledged that it would be an uphill task to steer the firm back to profitability. CEO Themba Mosai however told CCE News that the goal is attainable.
Group Five’s revenue for the year ended June 30 dropped by 21.6% to R10.8 billion compared to the previous financial year while core operating profit decreased from R736.5 million profit to a loss of R659.3 million.
Headline earnings per share (Heps) decreased from a profit of 335 cents per share in the previous financial year to a loss of 853 cents.
“If you look at the results we’re sitting with a business that just announced 8.29 rand fully diluted headline loss, so to turn it around from that would be quite a tall order,” said Mr Mosai. But he added,”We are poised to turn this ship around.”
A new board that was appointed at a recent shareholders meeting following a fierce boardroom battle has been tasked with leading Group Five to a more stable course in the coming year with plans to restructure its operations and improving execution of contracts.
When asked why the company was at its current precarious situation, Mr Mosai said,”the problem can be attributed to a failure to follow tried and tested processes and procedures.”
Going forward Mosai said that the Group will now increasingly train its sight on EPC (engineer, procure and construct) contracts which will move it up the construction value chain.
“We have done well on such projects in the past and will pursue opportunities especially in the rest of Africa,” he said adding that the move has been informed by dwindling contracts in South Africa.
Group Five’s previous CEO Eric Vemer left the company unexpectedly in February and four senior managers followed him. Mosai was appointed in May.
Economic slowdown in South Africa has affected every sector in the country. A recent PwC report acknowledges that the construction sector was even hard hit.
“The tough economic conditions in 2016 did not spare the construction industry, with lower revenue, decreased spend on projects, and a long term industry settlement, says Andries Rossouw, PwC Assurance Partner.