Johannesburg - Group Five has had to continue with retrenchments because of continued pressure in the local construction market, particularly in the civil engineering environment.
The listed construction and engineering group retrenched 2 500 employees to reduce its workforce, including limited duration contract employees, from 4 400 to about 1 900 in its financial year to June.
Eric Vemer, the chief executive of Group Five, said this week that the markets had remained weaker for longer than expected and the group had to take more costs out since June through retrenchments.
Vemer said the number of jobs cut would be disclosed when it released its interim financial results in February.
“The head office permanent staff was reduced by about 25 percent, but we had to take out further costs in the permanent staff at head office. We have had to take staff out of our manufacturing cluster too,” he said.
The impact of a loss-making power contract in the Eastern Cape dragged down the overall financial performance of Group Five in the year to June.
The group in August reported a 49 percent decline in fully diluted headline earnings a share to 204c, with revenue falling 10 percent to R13.9 billion and operating profit by 43 percent to R366.5 million.
Low tide
Vemer was hopeful at the time this was the furthest the “tide” would go out but said this week “the tide remains low”.
But Vemer said the building business was surprisingly active, with a lot of road and earthworks projects being tendered, although this market was extremely competitive.
The group’s concessions business was buoyant and continued to trade very well on the back of a strong performance out of Eastern Europe.
The traditional mining part of the civil engineering market was very quiet across Africa, but the power sector provided opportunities while the group’s manufacturing business was under pressure, he said.
Vemer was optimistic about opportunities for the group’s concessions business in Africa.
“We are busy tendering at a higher level than we ever have in the power and transport sectors across Africa,” he said.
The group aims to start projects through unsolicited bids.
“We always talk about things in Eastern Europe but Africa in our mind is turning a number of opportunities that will become real quite quickly,” he said.
Group Five shares fell by 2.31 percent to close at R20.70.
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