South African construction and engineering firm Group Five yesterday said it expected a 50 per cent rise in first-half earnings, but said its business in the Middle East was under pressure.
Group Five said its African and Eastern European operations remained buoyant and it expected a strong improvement in earnings for the full year. However, its said the global credit crisis and lower oil price had hit its business in the Middle East.
Dubai authorities had terminated a 3.3 billion rand (Dh1.19bn) contract and had suspended a 654 million rand contract, Group Five said.
It said other contracts to the value of 563 million rand in Dubai, Abu Dhabi and Jordan were not affected.
Group Five said headline earnings per share (EPS) – which strips out certain one-off, non-trading and financial items – was expected to be 45 per cent to 55 per cent higher for the six months to the end of December compared to the previous half.
The company's shares gained 3.98 per cent after the statement was released and were trading up 1.04 per cent at 34.01 rand, outperforming Johannesburg's Top 40 index, which was down 1.98 per cent.
Group Five, which has been benefiting from a building boom in South Africa ahead of the 2010 soccer World Cup, also said it had won more than 2 billion rand worth of public infrastructure contracts since November 2008.
"It is good news and bad news. On the earnings front, I think it was a pretty good performance, but some negative news throughout the Middle East," a Johannesburg-based construction analyst said. "It is going to be tough."