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Johannesburg - Construction firm Esorfranki [JSE:ESR] will post a dramatic drop in interim earnings because one of its flagship projects has been delayed for several months, it said on Friday.
Dave Gibbons, MD of Esorfranki's pipelines division, said during a tour of its Vaal pipeline site that the project has been delayed by more than four months.
"This job was awarded in February. It's a big job and means a lot to us, but we haven't got it off the ground," he said.
The project will pipe water to Johannesburg and is worth R160m - over half the order book of the pipeline business.
A trading update this week warned investors interim earnings are expected to drop by between 85% and 95%.
Gibbons said the premature awarding of the contract meant the group did not have access to the construction site, and Rand Water was concerned that blasting would affect current water supply to Johannesburg.
The group is trying to find a way to blast a path for the pipeline which will not damage any existing pipelines.
Gibbons said permits to work near the floodline, Eskom cabling that needs to be removed out of the pipeline's path and the clearing of servitudes all contributed to the delay on the project.
"If the project had started when it should have, our profitability would have looked a lot different," he said.
Earlier this year, construction firm Murray & Roberts reported a R619m cost overrun related to the delay in land handover for its Gautrain project. It is in the process of recouping the costs from government.
The construction industry, which relies on public infrastructure spending, has been plagued by shrinking margins and increased competition in the post-World Cup era.
The latest industry survey by the South African Federation of Civil Engineering Contractors shows the value of tenders awarded in the six months to end-March fell by 62%, compared to the previous period.
Esorfranki CEO Bernie Krone said the group is picking up bits and pieces of work, projects worth between R60m and R100m.
It has bid for the new multiproduct pipeline between Durban and Johannesburg.
The commissioning of the R800m project, however, has also been delayed, Transnet Capital Projects said on Thursday. According to reports, Transnet said it took longer than expected to get the necessary statutory approvals and the project will be delayed by nine months to September 2011.
- Fin24.com
Dave Gibbons, MD of Esorfranki's pipelines division, said during a tour of its Vaal pipeline site that the project has been delayed by more than four months.
"This job was awarded in February. It's a big job and means a lot to us, but we haven't got it off the ground," he said.
The project will pipe water to Johannesburg and is worth R160m - over half the order book of the pipeline business.
A trading update this week warned investors interim earnings are expected to drop by between 85% and 95%.
Gibbons said the premature awarding of the contract meant the group did not have access to the construction site, and Rand Water was concerned that blasting would affect current water supply to Johannesburg.
The group is trying to find a way to blast a path for the pipeline which will not damage any existing pipelines.
Gibbons said permits to work near the floodline, Eskom cabling that needs to be removed out of the pipeline's path and the clearing of servitudes all contributed to the delay on the project.
"If the project had started when it should have, our profitability would have looked a lot different," he said.
Earlier this year, construction firm Murray & Roberts reported a R619m cost overrun related to the delay in land handover for its Gautrain project. It is in the process of recouping the costs from government.
The construction industry, which relies on public infrastructure spending, has been plagued by shrinking margins and increased competition in the post-World Cup era.
The latest industry survey by the South African Federation of Civil Engineering Contractors shows the value of tenders awarded in the six months to end-March fell by 62%, compared to the previous period.
Esorfranki CEO Bernie Krone said the group is picking up bits and pieces of work, projects worth between R60m and R100m.
It has bid for the new multiproduct pipeline between Durban and Johannesburg.
The commissioning of the R800m project, however, has also been delayed, Transnet Capital Projects said on Thursday. According to reports, Transnet said it took longer than expected to get the necessary statutory approvals and the project will be delayed by nine months to September 2011.
- Fin24.com
