Shares in Group Five closed 6.8% higher at R12.50 in Johannesburg on Wednesday after the construction and engineering firm said it would sell its stake in a noncore steel pipe manufacturing business.

"Although the manufacturing cluster — which includes Group Five Pipe — remains a strong performer within the group and contributes solid earnings and cash flow, it is regarded as a noncore operation," the company said.

Group Five would sell its 50% share in Group Five Pipe for R80m to LB Pipes, a majority black-owned company.

LB Pipes has backing from the Industrial Development Corporation.

Group Five Pipe, a joint venture with Marine Civil, makes steel pipes mainly for water transport systems.

In the year to the end of June, Group Five’s share of operating profits from the joint venture was just R13,000.

Group Five reported a total comprehensive loss for the year to June of R907m, compared with a profit of R737m in 2016, as revenue dropped from R13.8bn to R10.8bn.

The company said in October that it would dispose of its manufacturing cluster, which makes up about 10% of its business, as it shifted focus from the low-margin construction industry towards infrastructure and investments.

This followed a reconstitution of the board in July, after shareholder Allan Gray insisted a shake-up was necessary.

The company’s shares have steadily slipped from more than R45 in early 2014.

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