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Group Five eyes high-growth Africa countries

Aug 15 2016 19:39

Johannesburg - Group Five, which has reported a first-half profit rise of 64%, is setting their sights on cross-border projects, including those in high-growth countries elsewhere in Africa to alleviate domestic growth pressure.

Diluted headline earnings per share, South Africa's main measure of profit that strips out certain one-off items, rose to 335 cents in the year to end-June from 204 cents in the previous year, it reported on Monday.

But its main engineering and construction business reported a R236m ($17.80m) operating profit loss compared with a R43m profit last year as South Africa's construction industry struggles to pull itself out of a six-year slump.

The South African construction firm said it expects a revival in commodity prices will prompt mining clients to increase spending on infrastructure projects.

The company, which still derives the bulk of its sales in southern Africa, has set its sights on cross-border projects including those in high-growth countries elsewhere in Africa to alleviate domestic growth pressure.

A possible recovery in contract awards could be on the cards in the upcoming year, as a revival in commodity prices encourage clients in the African mining industry to spend on infrastructure projects, the company said in a statement.

"We have seen a little bit of an improvement in some of those precious metal and resource commodity markets in Africa," chief executive Eric Vemer said.

"There's a number of enquiries in the tin environment, in fluorspar, in gold and some work in the platinum space."

Metal prices have staged a modest recovery in recent months with gold leading the charge after Britain's vote to leave the European Union sent investors into a safe-haven buying frenzy.

Africa's top gold producer AngloGold Ashanti on Monday reported half-year earnings that more than doubled due to higher prices and weaker currencies where it operates, while Kumba Iron Ore posted 20% higher first-half profit last month.

Vemer also said a recent rise in the price of crude was helping pick up activity in the west Africa's oil industry, where the company is bidding for projects.

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