Construction World February 2016

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CONSTRUCTION WORLD FEBRUARY 2016
>
COMMENT
EDITOR
Wilhelm du Plessis
ADVERTISING MANAGER
Erna Oosthuizen
LAYOUT & DESIGN
Lesley Testa
CIRCULATION
Karen Smith
TOTAL CIRCULATION:
(Third Quarter ’15)
5 098
PUBLISHER
Karen Grant
PUBLISHED MONTHLY BY
Crown Publications cc
P O Box 140
BEDFORDVIEW, 2008
Tel: 27 11-622-4770 • Fax: 27 11-615-6108
The views expressed in this publication are not necessarily those of the editor or the publisher.
PRINTED BY
Tandym Cape
@ConstWorldSA
worldmagazinesa
Last year was a challenging year for the
construction industry. Not only did it have lower
revenue, profit margins and less new projects,
but also had to contend with industrial action,
delays in projects (often substantial) as well as
safety issues pertaining to structural projects.
PwC’s recently released third edition of
SA Construction makes an interesting forecast
for the construction industry in 2016 – based on
the financial results of the leading construction
companies that are listed on the JSE for financial
year ends to June 2015.
It is accepted that the construction industry is
cyclical and is currently experiencing a cycle that
is not favourable. Eight of the nine companies
surveyed reflected a decrease in market capi-
talisation and financial performance. In fact, the
market capitalisation, on aggregate, decreased
with 38% to R25,9-billion as at 30 June 2015
(vs. R41,6-billion as at 30 June 2014). The report
also analysed the results of the nine companies
The South African construction
industry adds significant value to the
country. It creates jobs (some
1,4 million people are employed by the
industry – permanently or on contract)
while government benefits financially
from the direct taxes of the total value
it creates. It is therefore vital that this
industry weathers whatever storms it
may be experiencing.
from 30 June to 31 October 2015 – this showed
a further decline of 9%.
For the first time in five years, the secured
order book decreased – by 4%.
The total revenue for the period was
R129,3-billionwhich is 7% lower than the revenue
for 2013/14. This was due to the fact that Aveng’s
revenue decreased by R8,5-billion, Murray &
Roberts’ by R5,4-billion, Group Five’s by R1,6-bil-
lion. WBHO’s revenue increased by R0,3-billion
and that of Stefanutti Stocks by R1,5-billion.
According to the report, the decreases were
mainly as a result of the weaker South African
economy – and in particular commoditymarkets
that have seen a decrease in revenue from oil
and gas projects.
The management of risk has become vital
in this context. Companies will only reap the
benefits in the upturn of the cycle if they remain
sustainable in the downturn. This is, however,
easier said than done. In order for the industry
to be sustainable, they have to contend with
various risks including compliance with B-BBEE
codes; industrial unrest; talent management;
retention of staff; expansion; health, safety and
sustainability; and tender risk to name but a few.
These will have to be managed so as to
create a sustainable industry that will overcome
the short term difficulties and take advantage of
future infrastructure development.
Wilhelm du Plessis
Editor