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Johannesburg - A slowdown in government spend has forced construction giant Group Five [JSE:GBF] to reduce its reliance on public tenders.
Commenting on the group's interim results to end-December on Thursday, CEO Mike Upton said the firm's exposure to the public sector has gone down from 80% a year ago to 62%.
According to him, state bodies have reduced their spending on projects, despite government's promised extensive infrastructure investment programme. Group Five plans to counter this by procuring more contracts offshore.
"The group has proactively repositioned itself for a more balanced distribution of work between public and private sectors and domestic and international," said Upton.
"Opportunities going forward are focused on a more aggressive over-border presence in favour of public infrastructure contracts, private and renewable power and concessions, as well as a recovery in traditional mining, real estate and civil works markets."
Despite getting its fingers burnt in Dubai, the group continued with its presence in the Middle East, with new infrastructure opportunities and new contract wins in countries including Abu Dhabi, Jordan and Qatar.
The group pointed to a target project pipeline total of R115.9bn as at February 2010, from R72.6bn in August 2009. New projects identified amounted to R69.5bn in that period, with projects cancelled or lost amounting to R13.4bn.
However, projects re-valued stood at R11.2bn. Projects won was at R1.6bn, representing 34% of Group Five's total awards in the pipeline of R4.7bn.
"That gives you a pretty good indication of what is going on in the market place," said Upton, alluding to market volatility.
- I-Net Bridge & Sake24.com
