Group Five shares gain on results update

JSE-listed construction and engineering firm, Group Five, on Monday posted a 40.7% rise in headline earnings per share (HEPS) to 204c for the six months ended December 2013 from 145c a year earlier.

Shares in the group rallied on Monday after the construction firm posted a 40% rise in first-half earnings and dividend, signalling a multi-year industry slump may be ending.

Fully diluted headline earnings per share from continuing operations of 202c per share represented a 15.4% increase over the restated 175c per share for H1 FY 2013.

Revenue from continuing operations was up 55.7% to R7.7bn‚ while operating profit from continuing operations grew 27.5% to R328m. Profit for the period rose to R218.9m from R142.3m.

Commenting on the results, Group Five CEO Mike Upton said: “The sentiment in our markets is gradually improving, with South African demand still comparatively weak and the timing of a recovery remaining uncertain. The rest of Africa and Eastern Europe are demonstrating more visible opportunity."

Like other builders in Africa’s top economy, Group Five was hit hard when orders dried up after the end of the boom for the 2010 Soccer World Cup. The industry has also been stung by a R1.46bn regulatory fine over bid-rigging.

“Despite the hiatus in the South African market, we managed to deliver improved results, with increased revenue, operating profit and earnings. The earnings demonstrate an improved performance over the comparable reporting period and were delivered following the corrective action taken in the last two years, specifically with regard to the Construction Materials cluster and the group’s Middle East operations" Mr Upton said.

Group Five said in a statement its short-term outlook was "fair to good" even as conditions remained weak in some of its markets, adding it had some strong prospects in African power and transport infrastructure.

Shares of the company were up 4.3% at R45.40 at 9.55am GMT.

Headline earnings totalled 204c a share in the six months to end-December, from a restated 145c a year earlier.

Headline earnings per share exclude some one-time items.

The company raised its dividend to 45c from 32c a year earlier.