Wrecking ball hits home
Group Five’s malaise is a symptom of bigger problems in the building industry, which has struggled to adapt to change
Shareholders who coughed up money for Group Five shares at the beginning of 2018 have virtually nothing to show for it.
The construction conglomerate has continued its slide because of pressure on margins, lower revenue and a lower order book.
Its market cap has shrunk from R4.9bn in September
2013 to R25.8m.
Those who saw value in Group Five — which operates in SA, some African countries and Eastern Europe — and pinned their hopes on its restructuring and rationalisation interventions have had their investments badly damaged: the share price has fallen more than 98% since January. That makes it an even worse performer than Steinhoff International, which has fallen 81%.
What went wrong?
For a start: not enough investment by the private sector and the government, which affected Group Five and its peers.
Esor Construction has filed for business rescue; its rescue plan is set to be finalised in February, according to its rescue practitioners.
Group Five’s rating will improve only if the firm returns to sustainable cash profitability