South Africa's Group Five to cut more jobs as losses swell
* Bulk of jobs likely to be in engineering unit
* Operating loss widens to 1.4 billion rand
* Cautiously optimistic about local economic revival plan
(Adds CEO comments)
By Patricia Aruo
JOHANNESBURG, Oct 2 (Reuters) - South African construction
firm Group Five will cut more jobs as it seeks to trim
loss-making divisions, it said on Tuesday, highlighting an
industry-wide slump in its home market that has left many
companies fighting for survival.
South African construction companies have been hit hard in
recent years as stagnant economic growth has hobbled public
infrastructure spending, prompting some of them to file business
rescues, similar to chapter 11 bankruptcy in the United States.
Group Five is going through a restructuring in which it has
closed multiple non-profitable businesses in its local
construction unit and cut 602 permanent staff in the 2018
It is cutting more jobs in its money-losing Engineer,
Procure and Construction (EPC) division, which already lost 175
employees last year.
The EPC business suffered an 82.3 percent slump in revenue
to 386.9 million rand ($26.91 million) in the 2018 fiscal year,
which also widened the operating loss at group level.
"Numbers of workers to be retrenched are still a work in
progress right now but the main areas affected will be our EPC
business as we continue to resize for the current market," said
Chief Executive Themba Mosai.
Group Five posted a full-year operating loss of 1.4 billion
rand compared with 718 million rand loss the prior year, due to
higher costs from the delayed Kpone power project in Ghana.
Mosai was cautiously optimistic about President Cyril
Ramaphosa's plan to launch a 400 billion rand fund aimed at
re-igniting infrastructure spending even as the sector has
suffered delayed payments of some government contracts.
The fund is part of a long-awaited stimulus package seeking
to revitalise an economy that recently slipped into recession.
"The partnership between private sector and the government
is important to bring infrastructure development into the
country," said Mosai. "The fact that the government is focused
on that means that we can deliver quite a lot of infrastructure
in a short space of time."
Mosai also said that the downsized local construction
business was on the right path to return to profit in the 2019
($1 = 14.4100 rand)
(Reporting by Patricia Aruo
Editing by Tiisetso Motsoeneng and Emelia Sithole-Matarise)
First Published: 2018-10-02 09:07:00
Updated 2018-10-02 14:53:49
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