Group Five Swings to Profit on Contract Growth, Mideast Exit
Group Five Ltd. (GRF), a South African construction company, returned to profit in the year through June as the builder’s order book grew and it closed an unprofitable Middle East unit.
Net income for the 12 months through June was 272.7 million rand ($27.7 million), compared with a 278.4 million rand loss a year ago, the Johannesburg-based company said in a statement today. Sales rose 27 percent to 11.1 billion rand.
Losses from the Middle East operations narrowed to 50.8 million rand, compared with 200 million rand a year ago, Chief Financial Officer Christina Teixiera said on a conference call. The company is exiting the region after almost a decade to focus on Africa, she said.
Group Five’s construction order book rose 5 percent to 14.2 billion rand compared with December, and about 26 percent from the previous June. About 32 percent of sales in fiscal 2013 came from outside South Africa, within an acceptable range for the company, according to Teixiera. The dividend was raised by 86 percent to 67 South African cents a share.
Group Five has advanced 41 percent in Johannesburg this year compared with a 4.2 percent drop in the 7-member FTSE/JSE Africa Construction & Building Materials Index. It fell 1.3 percent today to 39.50 rand, the lowest level since July 31.
The company said talks continue with the Competition Commission over a possible fine for collusion in the South African construction industry, and it made a provision to cover any charge. The regulator agreed to a combined levy of 1.46 billion rand with 15 other companies in June.
“We offer our unreserved apology and we understand that the country demands an ethical, competitive and transformed construction industry,” Group Five said.
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