Group Five’s headline loss per share is expected to widen to R14.50 for the year to end-June, the embattled construction group said on Wednesday.

In its trading update, the group said that investors could expect a headline loss per share of between R13 and R14.50, compared with a loss of R8.53 per share in 2017.

After the announcement Group Five’s share price fell by as much as 30%, its biggest drop so far in 2018, and spurred negative sentiment for the sector as Aveng’s share price fell by more than 16%.

The construction sector in SA has been under considerable pressure over the past 10 years as the economy struggles. Fewer large construction projects are commissioned, leading to job losses in the sector.

There is some indication that the tide has turned for the sector as the government has indicated it plans to spend more than R940bn on infrastructure. But that change has not come soon enough to save Group Five’s 2018 results.

Independent analyst, Chris Gilmour said that while there was a little bit of government activity “here and there”, the issue was that overall the state was not spending.

“Many of the problems that bedevil the industry are being reflected in Group Five and Aveng and so many of them…. In 36 years I have not seen a wipeout of the construction industry as we are currently experiencing, there is absolutely nothing there,” he said.

Group Five said the local construction sector continued to be “impacted by weak market conditions with some contract awards not materialising or secured contracts materialising later than anticipated”, and that this affected the group’s overhead recovery.

Group Five pointed out that engineer, procure and construct contracts, while profitable, were trading behind forecast.

It saw further losses in the second half of its financial year despite benefits after the restructuring and rationalisation programmes implemented at the start of the financial year.

The company is expected to suffer further losses of R1.3bn in its Kpone power plant contract in Ghana, up from R649m. These were due to further costs incurred, foreign exchange rate volatility, and other factors. The group said, “notwithstanding any further potential delays to the project or to the dispute resolution process, the gross maximum delay penalty exposure remains capped at $62.5m”.