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Diversified construction company Group Five [JSE:GRF] expects further retrenchments to be mainly within its Engineer, Construct and Procurement (EPC) cluster, a spokesperson told Fin24 on Wednesday.
It is still unclear how many jobs will be shed in the next year.
In its audited results announcement for the financial year ended June 30, 2018, the group said on Tuesday that it had shed around 1 000 jobs over the past year, including 602 permanent jobs. Mainly the construction business and corporate office had been affected.
Speaking to Fin24, the spokesperson said the group had not yet determined how many jobs would be cut in 2019, as consultation with employees was still underway.
On Tuesday, Group Five had said that as part of its rationalisation and restructuring interventions, management had been "rightsizing and restructuring" its Construction SA and EPC clusters to make them sustainable.
They reassessed the 2018 and 2019 financial year forecasts for the Construction and EPC clusters and determined the cost reduction to match the reduced business size needed.
This included the rationalisation and standardisation of all overheads in Construction SA, EPC and at the corporate office.
It was determined that further retrenchments were needed, as well as an aggressive reduction in overheads.
The cost reduction to reduce the business size is estimated to have been about R211m during the financial year, and continues into the 2019 financial year.
The performance of Group Five during the past financial year was materially below expectations, the group said. Although the group reported revenue of R7.3bn, it shows a net loss of R1.3bn.
The main contributor was the significant loss reported on its independent engineer, procure and construct gas and oil-fired combined cycle power contract in Kpone, Ghana.
Group revenue decreased by 26.2% from R9.9bn to R7.3bn, mainly because of a 20.2% decrease in revenue from Construction SA and an 82.3% decrease in revenue from its Procure and Construct division.
By 15:22 on Wednesday, shares of Group Five were trading up 22.93% at R1.34 per share.
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